An increase in political risk can be managed by
A)adjusting a foreign investment project's NPV by either reducing its expected cash flows,or by increasing the cost of capital.
B)forming joint venture with a local company.
C)purchasing insurance against the hazard of political risk.
D)all of the options

Question

Quizplus · Accepted Answer

All of the options mentioned can help manage the increase in political risk. Adjusting the investment project's NPV by reducing expected cash flows or increasing the cost of capital can help mitigate potential losses. Forming a joint venture with a local company can provide access to local knowledge, resources, and networks. Purchasing insurance against political risk can help hedge against any potential losses. Therefore, all options are valid choices for managing an increase in political risk.

An Increase in Political Risk Can Be Managed by