Often, Investors Must Create Legal Structures for Their Investment That

question 14

Multiple Choice

Often, investors must create legal structures for their investment that will maximize the foreign venture's U.S. dollar resources. These might include:

• A) borrowing start-up money in local currency.
• B) buying supplies and services locally, using local currency.
• C) building unitary index adjustment factors into contractual payment terms.
• D) all of the above.

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Definitions:

Seller

An individual or business that offers goods or services for sale to consumers or other businesses.

Lemons Problem

A phenomenon where the presence of information asymmetry in a market leads to low-quality products being sold, as sellers have more information about the product than buyers.

Moral-Hazard

A situation where one party engages in risky behavior knowing that it is protected against the risk because another party will bear the cost.

Above-Equilibrium Wages

Wages that are higher than the market equilibrium, often used by employers to reduce turnover or increase productivity.