In: Economics
Assume a company is planning to make a major financial investment to build a manufacturing facility in a foreign country. Which of the following risks is particularly important to research in the foreign country?
Diversification risk |
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Commercial risk |
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Political risk |
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Translational risk |
|
Transactional risk |
Option C.
Financial investments in foreign countries are associated with different types of risks.
When a company plans to invest in a foreign country in order to build a manufacturing facility, it is particularly important to research on the political risks in the foreign country.
This is mainly because, various political events or decisions can affect a business profits as various political decisions or events of a country can cause administrative delays.
This can affect investor's or corporation's negativity during financial investments in foreign countries