When Quantifying Country Risk:​

question 4

Multiple Choice

When quantifying country risk:​

• A) ​weights should be equally allocated among factors.
• B) ​weights should be assigned to the political and financial factors according to their perceived importance.
• C) ​it is not generally necessary to construct separate ratings for political and financial risk since these will be equally weighed in the final analysis.
• D) ​the derived factors will be identical for all MNCs conducting business in that country.

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Definitions:

Capital Budgeting

The process a business undertakes to evaluate and select long-term investments that are likely to pay off over several years.

Divisional Cost

Costs that are attributed to a specific division within a company, often used for measuring the division's performance and profitability.

WACC

A formula called the Weighted Average Cost of Capital computes the cost of capital for a business by assigning proportional weights to different capital categories.

Stock Market

A public market for buying, selling, and issuance of stocks of publicly held companies, facilitating equity investment and ownership.