Government Host Policies Are Not Likely to Increase a Country's

question 4

Multiple Choice

Government host policies are not likely to increase a country's political and economic risks when

• A)the national government is unstable or weak.
• B)incentives such as reduced taxes,low-cost loans,and site-development assistance are provided to companies agreeing to construct or expand production and distribution facilities.
• C)there is distress in the country's monetary system.
• D)there are threats from piracy and lack of protection for the company's intellectual property.
• E)there is new onerous legislation or regulations on foreign-owned businesses.

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Definitions:

External Financing Need

The requirement for funds that a company must fulfill through external sources, like equity or debt, to finance its operations beyond what it can fund through its internal cash flow.

Full Capacity

The maximum level of output that a company can sustain over a long period without increasing its fixed costs.

Capital Intensity Ratio

A financial metric that measures the amount of capital needed per unit of output or the capital required to generate a dollar of revenue.

Operating Capacity

The maximum output that a company can produce under normal conditions.