When the Possibility Exists That the Government of a Nation

question 3

Multiple Choice

When the possibility exists that the government of a nation may impose some form of exchange controls or tax on foreign investment,the risk is known as ________ risk.

• A) political
• B) exchange controls
• C) business risk
• D) government

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Definitions:

Working Capital

The gap between a firm's current assets and its current liabilities, showcasing its short-term financial stability.

Annual Cash Inflow

The total amount of money received by a company over a year, including revenues from sales, investments, and other sources.

Net Present Value

An economic indicator that finds the disparity between cash inflows' present value and the present value of cash outflows during a certain period.

Discount Rate

A rate used to determine the present value of future cash flows; it's often used in discounted cash flow analysis to account for the time value of money.