How Does Using an Exporting Intermediary Limit the Risk Involved

question 145

Multiple Choice

How does using an exporting intermediary limit the risk involved with global marketing?

• A)Most exporting intermediaries assume all financial risks on behalf of their clients.
• B)Exporting intermediaries are not subject to the same laws as companies, and therefore limit the legal risk involved.
• C)Using an exporting intermediary restricts a company to being involved with joint ventures and not direct ownership.
• D)Exporting intermediaries guarantee that the products a company is selling will be a good fit for the foreign markets they are entering.
• E)This approach involves limited risk because the company has no direct investment in the foreign country.

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Definitions:

Reward-to-Variability Ratio

This ratio, often called the Sharpe ratio, measures the return of an investment relative to its risk, whereby a higher ratio indicates a more desirable outcome.

Risk-Free Asset

An investment perceived to have no risk of financial loss, often exemplified by government bonds.

Expected Return

The anticipated return on an investment based on the probabilities of various outcomes, factoring in both potential gains and losses.

Correlation Coefficient

A numerical metric that determines the intensity and orientation of a straight-line association between two factors.