When Evaluating a Foreign Investment Project, It Is Important for the MNC

question 95

Multiple Choice

When evaluating a foreign investment project, it is important for the MNC to consider the effect of political risk, as a sovereign country can change "the rules of the game". To account for this

• A)the MNC may adjust the cost of capital upward.
• B)the MNC may lower the expected cash flows from the foreign project.
• C)the MNC may purchase insurance policies against the hazard of political risks.
• D)all of the above

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Definitions:

Statutory Assignment

The transfer of rights or benefits from one party to another as permitted or dictated by statute.

Chose in Action

A personal right to property that is recoverable through legal action, such as debts owed or rights in a contract.

Contract Mistakes

Errors made by one or more parties that can affect the validity and enforceability of a contract.

Constructive Trust

A trust inferred by the courts to benefit a third party to a contract.