When One Says That Russia Suffers from a "Resource Curse

question 49

Multiple Choice

When one says that Russia suffers from a "resource curse," one means that

• A) the country's rich deposits of natural resources shelter it from some disruption but also makes it difficult to untangle economic and political power.
• B) the country lacks the necessary natural resources to develop economically.
• C) the country's dependence on export revenue from energy resources makes it highly susceptible to boom-and-bust cycles.
• D) the country has vast natural resources but lacks the capital to gain access to them.
• E) the country's vast energy reserves are mainly located in areas that are difficult to get to.

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Definitions:

Return on Equity

A financial ratio indicating the profitability of a company relative to its shareholders' equity, calculated as net income divided by shareholders' equity.

Weighted Average Cost of Capital (WACC)

A calculation of a firm's cost of capital in which each category of capital (debt, equity, etc.) is proportionately weighted, representing the average rate that a company is expected to pay for all its financing sources.

Market Price

The immediate valuation at which one can transact assets or services in the market sector.

Coupon Rate

The yearly rate of interest that a bond issuer pays to the bondholders, shown as a percentage of the bond's nominal value.