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:

Indirect Method

A way of calculating cash flows from operations by starting with net income and adjusting for changes in non-cash accounts.

Investment Banks

Financial institutions that assist individuals, corporations, and governments in raising capital, advising on mergers and acquisitions, and providing other financial services.

Certificate of Deposit

A savings certificate with a fixed maturity date, specified fixed interest rate, and can be issued in any denomination aside from minimum investment requirements.

Financial Intermediary

An institution that facilitates the channeling of funds between lenders and borrowers by intermediating between them.