Chapter 16, Problem 3BIC

Which of the following does NOT refer to the ways of how a multinational company can reduce political risk?  Taking a conservative approach to investment and adjusting NPV of the project by reducing expected cash flows or by increasing the cost of capital in accordance with existing trends. Purchasing insurance policy against political risks. Acquiring minor shares in foreign corporations. Creating a joint venture with local partners or a consortium with other multinational companies.

Do you think that a U.S. firm can experience political risk problems in its overseas projects because of the U.S. government?

Which one of the following is likely discouraging foreign direct investmen (FDI) in one country?  A. The foreign firm would produce a good which is currently not available in the host country. B. The foreign firm intends to partner with the local firms of the host country. C. The foreign firm's products are similar with the local firms of the host country. D. The foreign firm is able to compete in the market of the host country.  Clear my choice