Exam 18: Political Risk Assessment and Management

The U.S. Treasury bond is considered to be a "risk-free" security because the payment of principal and interest

Many problems such as poverty, environmental concerns, and cyber attacks are beyond the capabilities of MNEs alone to correct and require government participation as well.

Which of the following would be a shortcoming of adjusting discount rates to account for the increased risk of foreign investments?

Of the following, which was NOT identified by the authors as a type of cultural difference that MNEs must consider when expanding to foreign countries?

The speed at which inventory moves through a manufacturing process is known as ________.

Banks are very hesitant to engage in fronting loans because of the low probability of repayment and thus their risk exposure up to a 100% loss.

________ is the risk that the investor will not be able to convert profits, royalties, or fees into dollars.

Terrorism, cyber attacks, and the anti-globalization movement are each examples of ________ risks.

Which of the following is NOT an established regional market designed in part to reduce protectionism and trade barriers among members?

As of 2007, the United States government has been a willing participant and co-sponsor of international treaties to reduce pollution worldwide.

________ is a type of political risk that OPIC does NOT cover.

Which of the following is NOT a strategy to measure and manage foreign investment risks?

When faced with additional risk from a foreign investment, firms typically account for the additional risk by adjusting the discount rates or by adjusting cash flows.

An FDI project that enters a country for the purpose of constructing an assembly facility for products that are to be re-exported is an example of ________.

________ risks are those that affect the MNE at the local or project level, but originate at the country level.

Forming regional alliances is one way to help mitigate the practice of government protectionism. Which of the following is NOT a regional trade organization formed by government treaty?

________, also known as micro risks, are political risks that affect the MNE at the project and corporate level but do not originate at the country level.

Zimbabwe ranks 150th on the 2007 Corruption Perception Index. Thus, despite the country's economic woes, it still perceived as having low levels of government corruption.

Which of the following would NOT be considered a non-tariff barrier to trade?

According to surveys reported in March 2007, which country had the highest value (least risk) on a country-wide economic risk scale?