When considering the risk of foreign investment, higher risk could arise from exchange rate risk and political risk while lower risk might result from international diversification.

Question

Quizplus · Accepted Answer

This statement is true. Exchange rate risk can lead to fluctuations in the value of an investment due to changes in exchange rates, while political risk refers to the potential for a government or other political factor to negatively impact an investment. International diversification can help to mitigate these risks by spreading investments across different countries and currencies.

When Considering the Risk of Foreign Investment, Higher Risk Could