Question 1

When determining whether a particular proposed project in a foreign country is feasible:

Accepted Answer

A)  a country risk rating can adequately substitute for a capital budgeting analysis. 
B)  country risk analysis should be incorporated within the capital budgeting analysis. 
C)  the effect of country risk on sales revenue is more important than the effect on cash flows. 
D)  the project with the highest country risk rating (lowest country risk) should be accepted. 
E)  B and D 
A)  a country risk rating can adequately substitute for a capital budgeting analysis. 
B)  country risk analysis should be incorporated within the capital budgeting analysis. 
C)  the effect of country risk on sales revenue is more important than the effect on cash flows. 
D)  the project with the highest country risk rating (lowest country risk) should be accepted. 
E)  B and D

Question 2

After a project is accepted and implemented,country risk does not need to be monitored;since the project is already established,no further changes can be made.

Accepted Answer

A) True 
 B)False

Question 3

When quantifying country risk:

Accepted Answer

A)  weights should be equally allocated among factors. 
B)  weights should be assigned to the political and financial factors according to their perceived importance. 
C)  it is not generally necessary to construct separate ratings for political and financial risk since these will be equally weighed in the final analysis. 
D)  the derived factors will be identical for all MNCs conducting business in that country. 
A)  weights should be equally allocated among factors. 
B)  weights should be assigned to the political and financial factors according to their perceived importance. 
C)  it is not generally necessary to construct separate ratings for political and financial risk since these will be equally weighed in the final analysis. 
D)  the derived factors will be identical for all MNCs conducting business in that country.

Question 4

A mild form of political risk is a tendency of residents to purchase only:

Accepted Answer

A)  imported products. 
B)  locally produced products. 
C)  products produced by MNCs. 
D)  none of the above 
A)  imported products. 
B)  locally produced products. 
C)  products produced by MNCs. 
D)  none of the above

Question 5

When using a checklist approach to assess country risk,factors should be converted to some numerical forms and assigned equal weights.

Accepted Answer

A) True 
 B)False

Question 6

Delphi analysis examines the financial and political factors of various countries and attempts to identify which factors help to distinguish between tolerable-risk and intolerable-risk countries.

Accepted Answer

A) True 
 B)False

Question 7

Higher interest rates in a foreign country tend to ________ the growth of an economy and ________ demand for the MNC's product.

Accepted Answer

A)  increase;increase 
B)  reduce;reduce 
C)  increase;reduce 
D)  reduce;increase 
A)  increase;increase 
B)  reduce;reduce 
C)  increase;reduce 
D)  reduce;increase

Question 8

The most important variable in determining a country's degree of overall country risk:

Accepted Answer

A)  is political risk. 
B)  is financial risk. 
C)  is the probability of a host government takeover. 
D)  may often vary with the country of concern. 
A)  is political risk. 
B)  is financial risk. 
C)  is the probability of a host government takeover. 
D)  may often vary with the country of concern.

Question 9

Risk assessors almost always arrive at the same opinion after completing a macroassessment of country risk.

Accepted Answer

A) True 
 B)False

When determining whether a particular proposed project in a foreign country is feasible:

After a project is accepted and implemented,country risk does not need to be monitored;since the project is already established,no further changes can be made.

When quantifying country risk:

A mild form of political risk is a tendency of residents to purchase only:

When using a checklist approach to assess country risk,factors should be converted to some numerical forms and assigned equal weights.

Delphi analysis examines the financial and political factors of various countries and attempts to identify which factors help to distinguish between tolerable-risk and intolerable-risk countries.

Higher interest rates in a foreign country tend to the growth of an economy and demand for the MNC's product.

The most important variable in determining a country's degree of overall country risk:

Risk assessors almost always arrive at the same opinion after completing a macroassessment of country risk.

Multinational Financial Management: An Overview

International Flow of Funds

International Financial Markets

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships among Inflation,Interest Rates,and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Direct Foreign Investment

Multinational Capital Budgeting

Multinational Restructuring

Multinational Cost of Capital and Capital Structure

Long-Term Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Exam 16: Country Risk Analysis

When determining whether a particular proposed project in a foreign country is feasible:

After a project is accepted and implemented,country risk does not need to be monitored;since the project is already established,no further changes can be made.

When quantifying country risk:

A mild form of political risk is a tendency of residents to purchase only:

When using a checklist approach to assess country risk,factors should be converted to some numerical forms and assigned equal weights.

Delphi analysis examines the financial and political factors of various countries and attempts to identify which factors help to distinguish between tolerable-risk and intolerable-risk countries.

Higher interest rates in a foreign country tend to ________ the growth of an economy and ________ demand for the MNC's product.

The most important variable in determining a country's degree of overall country risk:

Risk assessors almost always arrive at the same opinion after completing a macroassessment of country risk.

Multinational Financial Management: An Overview

International Flow of Funds

International Financial Markets

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships among Inflation,Interest Rates,and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Direct Foreign Investment

Multinational Capital Budgeting

Multinational Restructuring

Multinational Cost of Capital and Capital Structure

Long-Term Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Higher interest rates in a foreign country tend to the growth of an economy and demand for the MNC's product.