Define and discuss country risk assessment, using examples to illustrate your points.
Country risk assessment (CRA) is an evaluation of the risk of losing an investment in a
particular country. It may be conducted by a bank or business and is increasingly
political in nature.
The risks themselves may be economic or financial and include the
balance-of-payments position, inflation levels, labor conditions, productivity levels, and
militancy in unions. Government instability that would lead to currency convertibility
restrictions, tariffs and quota changes, and tax rate and labor permit changes are also
assessed. Reliability and impartiality of the legal system and the risk of terrorism may
be assessed as well. CRA is affected by the nature of the business. Is it a hotel or a
With regard to globalization's complexity, the condition of multiplicity means that:
A. many currencies may be used.
B. financial markets may have different rules.
C. there are many more players and many more relationships to maintain.
D. increased ambiguity can work in the global leader's favor.
E. B and D.
Official prices ensure that:
A. imported goods will be sold at minimum prices, to avoid dumping.
B. a black market will be healthy and available for imported goods.
C. low-priced invoices to avoid tariffs will not be successful.
D. two of the above.