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)purchase insurance against the hazard of political risk.
D)all of the above

Question

Quizplus · Accepted Answer

all of the above options can be used to manage an increase in political risk. Adjusting NPV by reducing expected cash flows or increasing cost of capital can help mitigate potential losses, forming joint venture with a local company can provide insider knowledge and protection, and purchasing insurance can provide a safety net in case of unexpected events. Combining these strategies can provide a comprehensive approach to managing political risk.

An Increase in Political Risk Can Be Managed by