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    Question

    'Take-or-Pay' contracts are commonly used in

    infrastructure project financing to mitigate which risk?
    A Construction Risk Correct Answer Incorrect Answer
    B Operational Risk Correct Answer Incorrect Answer
    C Market (Demand) Risk Correct Answer Incorrect Answer
    D Political Risk Correct Answer Incorrect Answer
    E Force Majeure Risk Correct Answer Incorrect Answer

    Solution

    A Take-or-Pay contract is an agreement where a buyer agrees to either take the product from the seller or pay a specified amount if they do not take the product. This guarantees a revenue stream for the project company, thereby mitigating the risk of insufficient demand (Market Risk).

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