Test bank International Finance MCQ (word)Chap 18.docVIP

Fundamentals of Multinational Finance, 3e (Moffett) Chapter 18 Political Risk Assessment and Management 18.1 Multiple Choice and True/False Questions 1) The possibility of suffering harm or loss, or a course involving uncertain danger or hazard is a definition of ________. A) risk B) standard deviation C) beta D) variance Answer: A Topic: Risk Skill: Recognition 2) Which of the following is NOT an example of a subjective measure gathered by institutional researchers? A) a local countrys ranking for political stability B) a local countrys ranking for economic stability C) a local countrys unemployment rate D) All of the above are subjective measures. Answer: C Topic: Subjective Measures of International Risk Skill: Recognition 3) Of the following, which would NOT be considered a firm-specific risk? A) the risk of getting new management B) management policies toward hedging foreign exchange risk C) parent company policy toward management of local subsidiaries D) All could be considered firm-specific risk. Answer: D Topic: Firm-specific Risk Skill: Recognition 4) ________ risks are those that affect the MNE at the local or project level, but originate at the country level. A) Country-specific B) Firm-specific C) Global-specific D) None of the above Answer: A Topic: Country-specific Risk Skill: Recognition 5) Which of the following is NOT an example of a country-specific risk? A) transfer risk B) war and ethnic strife C) cultural and religious heritage D) All of the above are examples of country-specific risk. Answer: D Topic: Country-specific Risk Skill: Recognition 6) Which of the following is NOT a strategy to measure and manage foreign investment risks? A) sensitivity analysis B) diversification C) insurance D) All are strategies to measure and manage foreign investment risk. Answer: D Topic: Foreign