The Likelihood That a Trading Partner Will Opportunistically Break a Contract

question 35

Multiple Choice

The likelihood that a trading partner will opportunistically break a contract or expropriate property rights is called a(n)

• A) economic risk.
• B) legal risk.
• C) cultural risk.
• D) political risk.

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Definitions:

Basis

The initial value or purchase price of an asset for tax purposes, used to calculate the gain or loss on the sale of that asset.

Section 1231 Asset

Property used in a business and held for more than a year, qualifying for special tax treatment upon its sale or exchange.

Ordinary Income

Income earned from providing services or the sale of goods, including wages, salaries, tips, and interest, which is taxed at the standard rates.

Liquidation

Liquidation is the process of bringing a business to an end and distributing its assets to claimants, often occurring when a company is insolvent.