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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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