Introduction to Political and Economic Risk/Assessment

Assessment
1. Which of the following factors do companies find the most difficult to assess when initially trying to penetrate a foreign market?
 * a. the need to obtain legal advice on the country in question
 * b. evaluating the socio-cultural and socio-economic factors of the foreign environment and the need to visit and assess the foreign environment without being dependent only on information provided
 * c. the basic need for the product or potential for foreign trade or investment
 * d. the evaluation of country risk and exposure

2. The inability or unwillingness of the buyer to accept delivery of a shipment when it is ready is referred to as
 * a. economic risk.
 * b. political risk.
 * c. commercial risk.
 * d. country risk.

3. Fluctuation of exchange rates causing the price products to plummet and causing the seller to renegotiate pricing before shipment would be considered
 * a. commercial risk.
 * b. country risk.
 * c. political risk.
 * d. economic risk.

4. Country risk =
 * a. political risk + commercial risk.
 * b. economic risk + commercial risk.
 * c. political risk + economic risk.
 * d. commercial risk + transaction risk.

(Correct answers: 1=b, 2=c, 3=d, 4=c.)