The Act of State Doctrine

question 24

Multiple Choice

The act of state doctrine:

• A) allows foreign countries to be liable for their torts.
• B) allows state governments in the United States to ignore treaties entered into by the United States.
• C) provides that the judicial branch of a nation should not question the validity of actions taken by a foreign government within that foreign sovereign's own borders.
• D) is a very recent addition to U.S.law.

---

Definitions:

Equally-Weighted Portfolio

An investment portfolio in which each asset is allocated the same proportion of the total investment, regardless of the asset's market value.

Short Sell

The practice of selling a borrowed security with the intention of buying it back later at a lower price to profit from the price difference.

Arbitrage Pricing Theory

A financial model that estimates the return of an asset by considering multiple risk factors and their respective risk premiums, excluding unsystematic risk through diversification.

Nonsystematic Risk

The risk associated with a specific issuer of a security, also known as idiosyncratic or unsystematic risk, that can be reduced through diversification.