Potential Strategies to Mitigate the Risk of Expropriation and Amendments

question 20

Multiple Choice

Potential strategies to mitigate the risk of expropriation and amendments in the investment agreement include

• A) obtaining insurance from OPIC against country risk.
• B) thin equity injection supplemented with large local debt.
• C) using International Finance Institutions loans or co-investment vehicles.
• D) all of the above

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Definitions:

Direct Cost

Expenses that can be directly traced to the production of specific goods or services, such as raw materials and labor.

Indirect Cost

Costs associated with operations that cannot be directly linked to a specific product, service, or project (e.g., utilities, rent, and managerial salaries).

Period Cost

Expenses not directly tied to the production of goods, thereby charged to the accounting period in which they occur.

Product Cost

Costs that are incurred to acquire or manufacture a product, including direct materials, direct labor, and manufacturing overhead.