____ Risk Refers to the Uncertainty in the Return on a Foreign

question 23

Multiple Choice

____ risk refers to the uncertainty in the return on a foreign financial asset owing to the possibility that the foreign government might take actions that are detrimental to the investor's financial interests.

• A) Exchange rate
• B) Political
• C) Commercial
• D) Interest rate

---

Definitions:

Inflation Rate

The enhancement of the overall price tag of goods and services in an economy throughout a specific period.

Consumer Price Index

A statistical estimate that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time, indicating the rate at which purchasing power is eroding.

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, as an indicator of inflation or deflation.