Some of the Risks That a U

question 85

Multiple Choice

Some of the risks that a U.S. based MNC can encounter in its foreign investments are: (i) - an increase in the cost of borrowing due to a rise in interest rates
(ii) - increase in inflation rates
(iii) - dumping
(iv) - unfair competition by local companies
(v) - inconvertibility of foreign currencies
(vi) - expropriation
(vii) - destruction of properties due to war, revolution, and other violent political events in foreign countries
(viii) - loss of business income due to political violence
In the U.S., the Overseas Private Investment Corporation (OPIC) offers insurance against which of the above:

• A)(i), (ii), (iii), and (iv)
• B)(v), (vi), (vii), and (viii)
• C)a and b
• D)none of the above

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Definitions:

Net Income

The total profit or loss of a company after all revenues, costs, expenses, and taxes have been accounted for.

Common Stock

A type of security that represents ownership in a corporation, granting holders voting rights and a share in the company’s profits through dividends.

Return On Total Assets

A profitability ratio measuring net income produced by total assets during a period by comparing net income to the average total assets.

Dividends

Distributions to shareholders from a corporation, typically originating from the firm's earnings.