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Do you think that a U.S. firm can experience political risk problems in its overseas projects because of the U.S. government?
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- Which of the following is not a reason for U.S. firms operating in foreign markets? A.Better economic and political environment (in the U.S.) B.Less expensive labor C.Tax incentives D. To achieve international diversificationWhat do you think risk managers are doing (or in the current coronavirus situation as well as the sanctions on trade with Russia?Do you agree with the following claim? “U.S. companies with global operations can give you international diversification.” Think about both business risk and foreign exchange risk.
- 1. Should international companies invest in countries with totalitarian regimes? Why?Why might a foreign government’s policies be closely monitored by investors in other countries, even if the investors plan no investments in that country? Explain how monetary policy in one country can affect interest rates in other countries.Multinational corporations are exposed to higher risks that primarily come from two significant sources: (1) exchange rate risk and (2) political or country risk. An example of would be having property expropriated without adequate compensation. Which of the following are steps a company can take to reduce potential loss from expropriation? Check all that apply. Finance the subsidiary with local capital which reduces the local government's incentive to expropriate the multinational company's property. O Lock in the dollar return by selling currency in the forward market. Structure operations so that the subsidiary is only valuable as a part of the integrated corporate system. This reduces the risk exposure for the integrated company.
- 1. Supposed a company plans to expand its business abroad, what are the risks it might encounter? 2. What are the needed policy interventions that must be imposed upon doing business internationally?Why would the U.S. government consider reinstitutingthe “wall” between investment banking and commercialbanking?A sudden change in power can result in a regime that is hostile to foreign investment that is a primary example of an (n) _______ barrier ?
- The probability of losing investment in a foreign country is known as: O confiscation O political risk expropriation custom duty1- How important is a foreign direct investment to the world economy? 2- What financial reporting issues arise as a result of making a foreign direct investment? 3- What are some of the issues that arise in evaluating and maintaining control over foreign operations?The complexity posed by differences in the cultural, political, legal, and economic environments creates a so-called “liability of foreignness.” This idea holds that foreign companies, because of their poorer familiarity with local conditions, incur additional costs. In theory, the liability of foreignness makes IB activity too expensive. In practice, companies offset this liability by capitalizing on their unique advantages as well as selecting the mode of international business that best reflects their resource profile and risk tolerance--Always in the effort toward minimizing the intrinsic higher costs of international operations. The higher costs of international operations, executives point out, are driven by things as varied as the cost of legally establishing businesses, real estate costs, customs duties, and translation costs. Managing these costs is complicated by the report that _53_______%___ of global CEOs are concerned about the impact of __bribery and…