Which of the Following Is a Risk of Being the First

question 58

Multiple Choice

Which of the following is a risk of being the first to enter developing nations like India and China on a large scale?

• A)lower potential for long-term rewards
• B)absence of prior foreign entrants
• C)lack of control over quality
• D)fear of rapid imitation of technology
• E)high management turnover

---

Definitions:

Risk-Free Rate

The theoretical return on investment with no risk of financial loss, typically represented by the yield on government bonds.

Real Risk-Free Rate

The rate of return on a risk-free investment, such as government treasury bills, adjusted for inflation, representing the true earning power of the investment.

Expected Inflation Rate

The predicted average rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Market Risk Premium

The additional return that investors demand for holding a risky market portfolio instead of risk-free assets.