978-1337269964 Chapter 16 Lecture Notes

subject Type Homework Help
subject Pages 1
subject Words 167
subject Authors Jeff Madura

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Chapter 16
Country Risk Analysis
Lecture Outline
Country Risk Characteristics
Political Risk Characteristics
Financial Risk Characterisitcs
Measuring Country Risk
Techniques to Assess Country Risk
Deriving a Country Risk Rating
Incorporating Country Risk in Capital Budgeting
Adjustment of the Discount Rate
Adjustment of the Estimated Cash Flows
Analysis of Existing Projects
Preventing Host Government Takeovers
Use a Short-term Horizon
Rely on Unique Supplies or Technology
Hire Local Labor
Borrow Local Funds
Purchase Insurance
Use Project Finance
Chapter Theme
This chapter attempts to acquaint the student with various forms of risk that must be considered by a
multinational corporation. Methods used to assess country risk are defined. It should be emphasized that
country risk is often difficult to assess. Furthermore, it may change over time. A firm should incorporate
the country risk assessment in its decision of whether to begin (or continue) business in a particular
country. If it decides to conduct business there, it should continue to assess country risk as it decides
whether to expand in that country.

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