Which statement about the World Bank's AAA debt rating is correct?

Which statement about the World Bank's AAA debt rating is correct?

• A. It guarantees unlimited borrowing rights regardless of terms.
• B. It is used to regulate currency exchange among member countries.
• C. It ensures all member nations receive same interest rates.
• D. It allows the World Bank to borrow money at very low interest rates and pass these rates on to developing member countries.

Answer: (D)

A high AAA rating boosts the World Bank’s credibility in international capital markets, letting it borrow money at very low interest rates. Because it can borrow cheaply, the Bank can lend to developing member countries at favorable, often concessional, terms. This on-lending model is what the statement is describing: low borrowing costs for the Bank are passed on to borrowers. The other options misstate how the Bank operates—for example, borrowing terms aren’t unlimited or unconditional, currency regulation isn’t handled by the Bank, and interest rates aren’t identical for all members but vary by project, currency, and terms.

A high AAA rating boosts the World Bank’s credibility in international capital markets, letting it borrow money at very low interest rates. Because it can borrow cheaply, the Bank can lend to developing member countries at favorable, often concessional, terms. This on-lending model is what the statement is describing: low borrowing costs for the Bank are passed on to borrowers. The other options misstate how the Bank operates—for example, borrowing terms aren’t unlimited or unconditional, currency regulation isn’t handled by the Bank, and interest rates aren’t identical for all members but vary by project, currency, and terms.