Question 1

________ are bonds issued by countries in response to the Plan in which the principal and some initial interest payments are collateralized.

Accepted Answer

A)  Brady bonds 
B)  Baker bonds 
C)  Buybacks 
D)  Discount bond exchanges 
A)  Brady bonds 
B)  Baker bonds 
C)  Buybacks 
D)  Discount bond exchanges A

Question 2

What is the name of the type of insurance that can be purchased in the event a government may move against an exporter?

Accepted Answer

A)  credit risk insurance 
B)  political risk insurance 
C)  commercial risk insurance 
D)  sovereign risk insurance 
A)  credit risk insurance 
B)  political risk insurance 
C)  commercial risk insurance 
D)  sovereign risk insurance B

Question 3

Which one of the following economic variables would be the best to use to help investors determine a financially sound country?

Accepted Answer

A)  the ratio of family debt to income 
B)  the ratio of a country's external debt to its GDP 
C)  a country's rate of HIV contamination 
D)  a country's foreign direct investment by other countries 
A)  the ratio of family debt to income 
B)  the ratio of a country's external debt to its GDP 
C)  a country's rate of HIV contamination 
D)  a country's foreign direct investment by other countries B

Question 4

Political risk is the risk that a ________ will negatively affect a company's cash flows.

Accepted Answer

A)  company's management error 
B)  government action 
C)  labor strike 
D)  recession 
A)  company's management error 
B)  government action 
C)  labor strike 
D)  recession

Question 5

Which one of the following is the best advice for the MNC that wants to structure an investment so as to minimize the chance that political risk events will adversely affect the firm?

Accepted Answer

A)  focus on the long term 
B)  rely on common available supplies 
C)  use local resources 
D)  refuse to bargain with the government 
A)  focus on the long term 
B)  rely on common available supplies 
C)  use local resources 
D)  refuse to bargain with the government

Question 6

Brady bonds were issued in 1989 in response to the Brady Plan in which the

Accepted Answer

A)  debt of developing countries was securitized into easily tradable bonds. 
B)  countries agreed to change their economic policies following guidelines set by the UMF in exchange for new loans to developing countries. 
C)  repayment of debts from developing countries were severely restricted. 
D)  debts of developing countries were exchanged in debt-equity swaps. 
A)  debt of developing countries was securitized into easily tradable bonds. 
B)  countries agreed to change their economic policies following guidelines set by the UMF in exchange for new loans to developing countries. 
C)  repayment of debts from developing countries were severely restricted. 
D)  debts of developing countries were exchanged in debt-equity swaps.

Question 7

Which one of the following places an MNC at the most risk?

Accepted Answer

A)  protective tariffs 
B)  doing business in countries with inconvertible currencies 
C)  currency controls 
D)  currency boards 
A)  protective tariffs 
B)  doing business in countries with inconvertible currencies 
C)  currency controls 
D)  currency boards

Question 8

________ are assessments of political and economic events produced by specialized organizations that that could aversely affect companies operating in a country.

Accepted Answer

A)  Country risk premiums 
B)  Commercial risk ratings 
C)  Country risk ratings 
D)  Sovereign risk ratings 
A)  Country risk premiums 
B)  Commercial risk ratings 
C)  Country risk ratings 
D)  Sovereign risk ratings

Question 9

Suppose you are the Minister of Labor in Brazil and your government is proposing to raise the minimum wage to raise the income of the poorer workers and thereby offset the effects of other economic policies that man adversely impact them.Others in the cabinet are concerned about the effects of the policy will have on employment and competitiveness.What is your response to them?

Accepted Answer

To raise the minimum wage will boost inc

Question 10

Which one of the following is a method to minimize the chance that political risk events will adversely affect the firm?

Accepted Answer

A)  focus on the long term 
B)  rely on common available supplies 
C)  use local resources 
D)  refuse to bargain with the government 
A)  focus on the long term 
B)  rely on common available supplies 
C)  use local resources 
D)  refuse to bargain with the government

Question 11

________ is the risk that a government action will negatively affect a company's cash flows.

Accepted Answer

A)  Political risk 
B)  Economic risk 
C)  Social risk 
D)  Expropriation 
A)  Political risk 
B)  Economic risk 
C)  Social risk 
D)  Expropriation

Question 12

Political risk is ________ and does not require a discount rate adjustment when forecasting cash flows.

Accepted Answer

A)  diversifiable 
B)  not diversifiable 
C)  difficult to quantify 
D)  the same as financial risk 
A)  diversifiable 
B)  not diversifiable 
C)  difficult to quantify 
D)  the same as financial risk

Question 13

What are some indicators of country health?

Accepted Answer

Some indicators would be minim

Question 14

________ is the name given the difference between the yield on a bond issued by a developing country in a currency and the government bond yield of the country that issues the currency.

Accepted Answer

A)  The banking spread 
B)  The country risk premium 
C)  The country risk rating 
D)  The country credit spread 
A)  The banking spread 
B)  The country risk premium 
C)  The country risk rating 
D)  The country credit spread

Question 15

Which one of the following do MNCs use to lower the cost of their investment into a country?

Accepted Answer

A)  foreign bond markets 
B)  international banks 
C)  debt-equity swaps 
D)  long-term forward contracts 
A)  foreign bond markets 
B)  international banks 
C)  debt-equity swaps 
D)  long-term forward contracts

Question 16

How might a government budget deficit lead to inflation?

Accepted Answer

Instead of financing the deficit by rais

Question 17

What is the difference between political risk and sovereign risk?

Accepted Answer

Political risk is the possibility of a g

Question 18

Which one of the following is the name for the action of a country takes when it repays a loan at a discount?

Accepted Answer

A)  debt buyback 
B)  discount bond exchange 
C)  par bond exchange 
D)  conversion bonds 
A)  debt buyback 
B)  discount bond exchange 
C)  par bond exchange 
D)  conversion bonds

Question 19

The discount rate in capital budgeting need not be adjusted for political risk.Agree or disagree and explain why.

Accepted Answer

We need not adjust the discount rate for

Question 20

A country's credit spread is another indicator of

Accepted Answer

A)  sovereign risk. 
B)  commercial risk. 
C)  political risk. 
D)  credit risk. 
A)  sovereign risk. 
B)  commercial risk. 
C)  political risk. 
D)  credit risk.

________ are bonds issued by countries in response to the Plan in which the principal and some initial interest payments are collateralized.

What is the name of the type of insurance that can be purchased in the event a government may move against an exporter?

Which one of the following economic variables would be the best to use to help investors determine a financially sound country?

Political risk is the risk that a ________ will negatively affect a company's cash flows.

Which one of the following is the best advice for the MNC that wants to structure an investment so as to minimize the chance that political risk events will adversely affect the firm?

Brady bonds were issued in 1989 in response to the Brady Plan in which the

Which one of the following places an MNC at the most risk?

________ are assessments of political and economic events produced by specialized organizations that that could aversely affect companies operating in a country.

Which one of the following is a method to minimize the chance that political risk events will adversely affect the firm?

________ is the risk that a government action will negatively affect a company's cash flows.

Political risk is ________ and does not require a discount rate adjustment when forecasting cash flows.

What are some indicators of country health?

________ is the name given the difference between the yield on a bond issued by a developing country in a currency and the government bond yield of the country that issues the currency.

Which one of the following do MNCs use to lower the cost of their investment into a country?

How might a government budget deficit lead to inflation?

What is the difference between political risk and sovereign risk?

Which one of the following is the name for the action of a country takes when it repays a loan at a discount?

The discount rate in capital budgeting need not be adjusted for political risk.Agree or disagree and explain why.

A country's credit spread is another indicator of

Globalization and the Multinational Corporation

The Foreign Exchange Market

Forward Markets and Transaction Exchange Risk

The Balance of Payments

Exchange Rate Systems

Interest Rate Parity

Speculation and Risk in the Foreign Exchange Market

Purchasing Power Parity and Real Exchange Rates

Measuring and Managing Real Exchange Risk

Exchange Rate Determination and Forecasting

International Debt Financing

International Equity Financing

International Capital Market Equilibrium

International Capital Budgeting

Additional Topics in International Capital Budgeting

Risk Management and the Foreign Currency Hedging Decision

Financing International Trade

Managing Net Working Capital

Foreign Currency Futures and Options

Interest Rates and Foreign Currency Swaps

Filters

Exam 14: Country and Political Risk

________ are bonds issued by countries in response to the Plan in which the principal and some initial interest payments are collateralized.

What is the name of the type of insurance that can be purchased in the event a government may move against an exporter?

Which one of the following economic variables would be the best to use to help investors determine a financially sound country?

Political risk is the risk that a ________ will negatively affect a company's cash flows.

Which one of the following is the best advice for the MNC that wants to structure an investment so as to minimize the chance that political risk events will adversely affect the firm?

Brady bonds were issued in 1989 in response to the Brady Plan in which the

Which one of the following places an MNC at the most risk?

________ are assessments of political and economic events produced by specialized organizations that that could aversely affect companies operating in a country.

Which one of the following is a method to minimize the chance that political risk events will adversely affect the firm?

________ is the risk that a government action will negatively affect a company's cash flows.

Political risk is ________ and does not require a discount rate adjustment when forecasting cash flows.

What are some indicators of country health?

________ is the name given the difference between the yield on a bond issued by a developing country in a currency and the government bond yield of the country that issues the currency.

Which one of the following do MNCs use to lower the cost of their investment into a country?

How might a government budget deficit lead to inflation?

What is the difference between political risk and sovereign risk?

Which one of the following is the name for the action of a country takes when it repays a loan at a discount?

The discount rate in capital budgeting need not be adjusted for political risk.Agree or disagree and explain why.

A country's credit spread is another indicator of

Globalization and the Multinational Corporation

The Foreign Exchange Market

Forward Markets and Transaction Exchange Risk

The Balance of Payments

Exchange Rate Systems

Interest Rate Parity

Speculation and Risk in the Foreign Exchange Market

Purchasing Power Parity and Real Exchange Rates

Measuring and Managing Real Exchange Risk

Exchange Rate Determination and Forecasting

International Debt Financing

International Equity Financing

International Capital Market Equilibrium

International Capital Budgeting

Additional Topics in International Capital Budgeting

Risk Management and the Foreign Currency Hedging Decision

Financing International Trade

Managing Net Working Capital

Foreign Currency Futures and Options

Interest Rates and Foreign Currency Swaps

Filters