FIN 4604 Final Exam Questions And Correct
Answers
The degree of political risk faced by a firm operating in a foreign country depends on how
the firm has structured its operations
One good indicator of political risk is the seriousness of capital flight
Capital flight occurs for several reasons, most of which have to do with high taxes on
local investments
Expropriation or creeping expropriation is most likely in the sector of an economy.
extractive
The great economic lesson of the ill-fated, post-World War II experiment in Communism is that
_________ work and command economies do not. centralized economic controls
A large government deficit relative to GDP, a high rate of money expansion accompanied by
fixed exchange rates, along with substantial government expenditures are some of the common
characteristics of _________ risk. country
,FIN 4604 Final Exam Questions And Correct
Answers
A structure of incentives that rewards risk taking in productive ventures is an indicator of long-
run _____________ health for a country. economic
The state's best strategy is to provide basic _________ in order to promote economic growth.
lifelong pensions for its workers
What ultimately determines a nation's ability to repay foreign loans is its ability to generate
___________. hard currencies
The economic experiences of Mexico, Chile, and Argentina in the recent past show that they all
possessed a_________. head of state who demonstrates strong will and leadership
When investing in a natural resource project, a mining firm would NOT add value to the project
by using local financing
During the 1980s many Latin American countries believed in a policy that economic growth was
best promoted by extensive state ownership which led to capital flight
, FIN 4604 Final Exam Questions And Correct
Answers
Which one of the following is a tough-minded economic policy that may halt capital flight?
removing barriers to investment by foreigners
An oil company would NOT manage its political risk in Nigeria by using local financing
Political risk is primarily a function of uncertainty over property rights
Which one of the following is NOT a form of direct political risk to the multinational
corporation? privatization of public utilities
Which one of the following is NOT a measure of political instability? the number of
political parties in one nation
Which of the following foreign investments would be least subject to expropriation? an
assembly plant for automobiles located in an LDC
Answers
The degree of political risk faced by a firm operating in a foreign country depends on how
the firm has structured its operations
One good indicator of political risk is the seriousness of capital flight
Capital flight occurs for several reasons, most of which have to do with high taxes on
local investments
Expropriation or creeping expropriation is most likely in the sector of an economy.
extractive
The great economic lesson of the ill-fated, post-World War II experiment in Communism is that
_________ work and command economies do not. centralized economic controls
A large government deficit relative to GDP, a high rate of money expansion accompanied by
fixed exchange rates, along with substantial government expenditures are some of the common
characteristics of _________ risk. country
,FIN 4604 Final Exam Questions And Correct
Answers
A structure of incentives that rewards risk taking in productive ventures is an indicator of long-
run _____________ health for a country. economic
The state's best strategy is to provide basic _________ in order to promote economic growth.
lifelong pensions for its workers
What ultimately determines a nation's ability to repay foreign loans is its ability to generate
___________. hard currencies
The economic experiences of Mexico, Chile, and Argentina in the recent past show that they all
possessed a_________. head of state who demonstrates strong will and leadership
When investing in a natural resource project, a mining firm would NOT add value to the project
by using local financing
During the 1980s many Latin American countries believed in a policy that economic growth was
best promoted by extensive state ownership which led to capital flight
, FIN 4604 Final Exam Questions And Correct
Answers
Which one of the following is a tough-minded economic policy that may halt capital flight?
removing barriers to investment by foreigners
An oil company would NOT manage its political risk in Nigeria by using local financing
Political risk is primarily a function of uncertainty over property rights
Which one of the following is NOT a form of direct political risk to the multinational
corporation? privatization of public utilities
Which one of the following is NOT a measure of political instability? the number of
political parties in one nation
Which of the following foreign investments would be least subject to expropriation? an
assembly plant for automobiles located in an LDC
