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16 Country Risk Worksheet

Chapter 16 focuses on country risk analysis, emphasizing its importance in long-term investment decisions and the need for ongoing monitoring even after project implementation. It distinguishes between micro and macro assessments of country risk and discusses various factors, including political and financial risks, that should be considered when quantifying country risk. The chapter also outlines techniques for assessing country risk and the benefits of project finance in mitigating exposure to government takeovers.

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2 views2 pages

16 Country Risk Worksheet

Chapter 16 focuses on country risk analysis, emphasizing its importance in long-term investment decisions and the need for ongoing monitoring even after project implementation. It distinguishes between micro and macro assessments of country risk and discusses various factors, including political and financial risks, that should be considered when quantifying country risk. The chapter also outlines techniques for assessing country risk and the benefits of project finance in mitigating exposure to government takeovers.

Uploaded by

ase120438
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd

Chapter 16 Country Risk Analysis

worksheet

Name:__________________________________ Date:___________________________________

1. Country risk analysis is important because it:


a. Only focuses on whether to hedge contractual transactions.
b. Only focuses on the competitor firms in its industry.
c. can be used to improve the analysis used to make long-term investing decisions.

2. Project risk, can be incorporated into the capital budgeting analysis of a proposed project by
adjustment of the discount rate or by adjustment of the estimated cash flows.
a. True
b. False
3. After a project is accepted and implemented, country risk does not need to be monitored; even though the
project is already established.
a. True
b. False
4. A micro-assessment of country risk involves consideration of all variables that affect country risk except
for those unique to a particular firm or industry.
a. True
b. False
5. A macro-assessment of country risk:
a. Is the overall risk assessment of a country
b. includes aspects relevant to a particular firm or project.
c. none of the above

6. When quantifying country risk:


a. weights should be equally allocated among factors.
b. weights should be assigned to the political and financial factors according to their
perceived importance.
c. it is not generally necessary to construct separate ratings for political and financial risk
since these will be equally weighed in the final analysis.
d. the derived factors will be identical for all MNCs conducting business in that country.

7. ____ is are forms of political risk.


a. Attitude of consumers in the host country
b. Actions of the host government
c. Blockage of fund transfers
d. All of the above are forms of political risk

1
8.____ Is a (are) financial risk factors.
a. Interest rates
b. Exchange rates
c. Inflation rates
d. All of the above

9. Which of the following is not a technique to assess country risk?


a. Gamma technique.
b. Delphi technique.
c. checklist approach.
d. inspection visits.
10. Using project finance reduces exposure to a host government takeover.
a. True
b. False

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