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B unexpected changes in environmental policies

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B. unexpected changes in environmental policies, sourcing/local content requirements,minimum wage law, and restriction on access to local credit facilities.C. restrictions imposed on the maximum ownership share by foreigners, mandatory transfer ofownership to local firms over a certain period of time (fade-out requirements), and thenationalization of local operations of MNCs.D. none of the above91. Once a MNC decides to undertake a foreign project, it can take various measures tominimize its exposure to political risk. These includeA. the MNC can form a joint venture with a local company.B. the MNC may also consider forming a consortium of international companies to undertakethe foreign project.C. the MNC can use local debt to finance the foreign project.D. the MNC may purchase insurance against the hazard of political risk.E. all of the above16-21
Chapter 16 - Foreign Direct Investment and Cross-Border Acquisitions92. One particular type of political risk that MNCs and investors may face is corruptionassociated with the abuse of public office for private benefits.A. Investors may often encounter demands for bribes from politicians and governmentofficials for contracts and smooth bureaucratic processes.B. If companies refuse to makegrease payments, they may lose business opportunities or facedifficult bureaucratic red tape.C. They may risk violating laws or being embarrassed when the payments are discovered andreported in the media.D. All of the above93. In evaluating political risk, experts focus their attention on a set of key factors such asA. integration of the host country into the world political/economic system.B. the host country's ethnic and religious stability.C. the host country's regional security, and key economic indicators.D. all of the above94. When evaluating a foreign investment project, it is important for the MNC to consider theeffect of political risk, as a sovereign country can change "the rules of the game". To accountfor thisA. the MNC may adjust the cost of capital upward.B. the MNC may lower the expected cash flows from the foreign project.C. the MNC may purchase insurance policies against the hazard of political risks.D. all of the above95. In evaluating political risk, experts focus their attention on a set of key factors such asA. the host country's political/government system.B. historical records of political parties and their relative strengths.C. integration of the host country into the world political/economic system.D. all of the above16-22
Chapter 16 - Foreign Direct Investment and Cross-Border Acquisitions96. Country riskA. is a broader measure of risk than political risk.B. encompasses political risk, credit risk, and other economic performances.C. all of the aboveD. none of the above97. North Korea, Iran, and Cuba are examples ofA. countries with low levels of political risk.

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