Which of the Following Is a Disadvantage of International Expansion

question 145

Multiple Choice

Which of the following is a disadvantage of international expansion?

• A)An FI can lower its net regulatory burden and therefore increase its potential net profitability by finding countries that have reduced activity restrictions and reserve requirements.
• B)An FI can generate additional returns from new product innovations if it can sell such services internationally rather than just domestically.
• C)Monitoring and information collection cost often are higher in international markets.
• D)International expansion allows an FI to search for cheaper and more available sources of funds.
• E)International activities enhance the opportunities to diversify the risk of earnings flows.

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Definitions:

Flood

An overflow of water that submerges land which is usually dry.

Insurance

A risk management tool that provides financial protection against potential losses in exchange for premium payments.

Wealth

The abundance of valuable financial assets or physical possessions which can be converted into forms that can be used for transactions or investments.

Von Neumann-Morgenstern

A utility theorem that represents individuals' preferences over risky choices, and is foundational in expected utility theory.