If a U.S. firm borrows money from a host country bank as a hedge against being forced out of operation without adequate compensation, the firms is managing political risk with ________.

Question

Quizplus · Accepted Answer

Local debt financing involves borrowing money from a host country bank, which can serve as a hedge against political risk. By obtaining local financing, the firm can minimize the impact of political changes or expropriation by reducing its exposure to foreign lenders. Thus, it is an effective way of managing political risk in the context of international business. Position control, development assistance, and adaptation are not relevant to this scenario.

If a US Firm Borrows Money from a Host Country Bank as Bank