If a Foreign-Based Firm Borrows Money from a Host Country

question 80

Multiple Choice

If a foreign-based firm borrows money from a host country bank as a hedge against being forced out of operation without adequate compensation, the firm is managing political risk with ________.

• A)local debt financing
• B)position control
• C)development assistance
• D)adaptation

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Definitions:

Period Cost

These are costs that are not directly tied to the production process and are expensed in the period in which they occur. Examples include selling, general, and administrative expenses.

Raw Materials

Basic materials used in the production process, transformed into finished goods through manufacturing or processing.

Computer Board

A printed circuit board used in a computer to which the processor, RAM, and other components are attached.

True Variable Cost

Costs that vary directly and proportionally with the level of production or activity within a business.