Risks Inherent in Making Investments in Foreign Countries Include

question 109

Multiple Choice

Risks inherent in making investments in foreign countries include:

• A)the value of their investment changes as the exchange rates change.
• B)cash flows to be received in the future may be worth less when actually received if the foreign exchange rate fluctuates dramatically.
• C)political risks due to an unstable government.
• D)All of these are risks inherent in making investments in foreign countries.

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Definitions:

Monthly Interest Rate

The interest rate for a period of one month, often used to calculate the interest on loans and financial products on a monthly basis.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid.

Net 30 Credit Policy

A payment term indicating that payment is due in full 30 days after the goods or services have been delivered.

Switch Break-Even Point

The analysis used to determine the point at which the cost of switching to a different product, service, or system is recouped through subsequent cost savings or benefits.