________ Is the Ability to Exercise Effective Control Over a Foreign

question 4

Multiple Choice

________ is the ability to exercise effective control over a foreign subsidiary within a country's legal and political environment.

• A) Political risk
• B) Portfolio risk
• C) Interest rate risk
• D) Governance risk

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Definitions:

Rebalanced

The process of realigning the weightings of a portfolio of assets to maintain an original or desired level of asset allocation or risk.

Modified Duration

A measure of the price sensitivity of a bond or other debt instrument to an interest rate change, factoring in the changing cash flow timings.

Price-volatile

Characteristic of a financial instrument whose price can undergo significant fluctuations in a short period.

Higher Credit Rating

Indicates a stronger likelihood that a borrower, either a corporation or government entity, will meet its debt obligations, signifying lower credit risk.