When the possibility exists that the government of a nation may impose some form of exchange controls or tax on foreign investment,the risk is known as ________ risk.

Question

Quizplus · Accepted Answer

Political risk refers to the risk of expropriation, nationalization, or changes in government policies that may adversely affect a foreign investor's financial interests. The possibility of a government imposing exchange controls or taxes on foreign investments is a type of political risk. Business risk refers to the potential for loss or failure in the operations of a company, while exchange controls and government risks are specific subsets of political risk. Therefore, option A is the best choice.

When the Possibility Exists That the Government of a Nation