The checklist approach: requires
ratings
and weights to be assigned to all factors relevant in assessing country risk. The most important variable in determining a country’s degree of overall country risk: may often vary with the country of concern.
Which of the following could be an example of political risk?
Non-Economic Political Risk Factors
Other examples of political risk include disruptions such as
terrorism, riots, coups, civil wars, international wars
, and even elections that may change the ruling government. These can dramatically affect businesses’ ability to operate.
Which of the following is probably the best method of incorporating country risk into a capital budgeting analysis?
According to the text, the most appropriate method of incorporating country risk into capital budgeting analysis is to:
estimate the effect of each form of country risk on cash flows.
How MNCs can prevent host government takeovers?
MNCs can reduce the likelihood of a host government takeover of their subsidiary by
using a short-term horizon
for their operations whereby the investment in the subsidiary is limited.
What is not a form of political risk?
A tax increase
is never the result of political forces and can therefore not be considered a political risk. All of the above. One form of political risk is government measures to improve the competitiveness of national companies.
Which of the following is probably the best method of incorporating country risk?
According to the text, the most appropriate method of incorporating country risk into capital budgeting analysis is to:
estimate the effect of each form of country risk on cash flows
.
Which of the following is a reason to consider international business?
Diversification
is a reason to consider in international business.
What is political risk index?
The PRI is
the overall measure of risk for a given country
, calculated by using all 17 risk components from the PRS Methodology including turmoil, financial transfer, direct investment, and export markets.
How can political risks be prevented?
- Political risk insurance and guarantees (PRI)
- Joint ventures or alliances with local companies.
- Consultations with governments and political leaders.
- Risk Analysis.
What is political risk?
Political risk is generally defined as
the risk to business interests resulting from political instability or political change
. … Political risk may also result from events outside of government controls such as war, revolution, terrorism, labor strikes, and extortion.
What are the main features of MNCs?
- (i) Huge Assets and Turnover: …
- (ii) International Operations Through a Network of Branches: …
- (iii) Unity of Control: …
- (iv) Mighty Economic Power: …
- (v) Advanced and Sophisticated Technology: …
- (vi) Professional Management: …
- (vii)Aggressive Advertising and Marketing:
What is full form of MNCs?
A
multinational corporation
(MNC) has facilities and other assets in at least one country other than its home country. A multinational company generally has offices and/or factories in different countries and a centralized head office where they coordinate global management.
What are the harmful effects of MNCs to a host country?
(i)
MNCs are profit driven and are less concerned for the development of the host country
. (ii) The technology used are capital intensive and expensive which are not suitable to a developing country. (iii) In some instances, labour laws are not properly implemented and the workers do not get their rights.
What forms can political risk take?
Types of political risk
Political risk may affect several aspects of a business, including personnel, assets, contracts, operations, transfers, and company goals. Risks to personnel and operations may include
intimidation, kidnapping, sabotage, and terrorism
, especially if the risks arise from political concerns.
What gives rise to country risk?
Country risk refers to the uncertainty associated with investing in a particular country, and more specifically the degree to which that uncertainty could lead to losses for investors. This uncertainty can come from any number of factors including
political, economic, exchange-rate, or technological influences
.
Which of the following refers to a political risk?
Political risk refers to
the potential for government upheaval or interference with business to harm an operation within a country
. … The process of seizing a firm’s assets in a country by the national government is known as centralization.
