GMS 522 CHAPTER #4 EXAM
QUESTIONS WITH CORRECT ANSWERS
Qualifying corruption levels - Bribe Payer Index - Answer-likelihood home firms bribe
overseas (10-NL) - Supply side - Net/Swit (8.8-1) Can (8.5-6) China (6.5 - 27)
Host country - Answer-legal and political environment = major impact)
Host country - Political risk - Answer-risk of loss when investing = change political
structure (tax/tariffs)
Political risk - Types - Answer-ownership(property & life) operating(ongoing)
transfer(shifting $)
Political risk - Coups d'etat - Answer-changes after firm has invested in country
(developing)
Political risk - Expropriation - Answer-seizure of foreign assets with payment/comp to
owners
Political risk - Confiscation - Answer-transfer of ownership from foreign-host without
comp
Political risk - Domestic/nationalization - Answer-partial transfer ownership/management
(local)
Political risk - Price controls - Answer-ceiling of product price - /profits (Coke/pepsi - left
Mexico)
Political risk - Local content requirements - Answer-utilize local parts/labor ≠ rely 100%
imports
Political risk - Terrorosim - Answer-systematic threat/violence (disrupt business,
<investment)
Political risk - Measurement - Answer-Profit Opportunity Recommendations Index
(POR) - BERI, Low (70-100), Moderate (59-69), High risk (40-54), Prohibitive risk (0-39)
Strategies for mitigating political risk - Answer-monitor political developments/insurance
General global environment - Answer-political/geal enviro in home/host & general global
enviro
The legal environment - Answer-laws/regulations impact business = political decision
QUESTIONS WITH CORRECT ANSWERS
Qualifying corruption levels - Bribe Payer Index - Answer-likelihood home firms bribe
overseas (10-NL) - Supply side - Net/Swit (8.8-1) Can (8.5-6) China (6.5 - 27)
Host country - Answer-legal and political environment = major impact)
Host country - Political risk - Answer-risk of loss when investing = change political
structure (tax/tariffs)
Political risk - Types - Answer-ownership(property & life) operating(ongoing)
transfer(shifting $)
Political risk - Coups d'etat - Answer-changes after firm has invested in country
(developing)
Political risk - Expropriation - Answer-seizure of foreign assets with payment/comp to
owners
Political risk - Confiscation - Answer-transfer of ownership from foreign-host without
comp
Political risk - Domestic/nationalization - Answer-partial transfer ownership/management
(local)
Political risk - Price controls - Answer-ceiling of product price - /profits (Coke/pepsi - left
Mexico)
Political risk - Local content requirements - Answer-utilize local parts/labor ≠ rely 100%
imports
Political risk - Terrorosim - Answer-systematic threat/violence (disrupt business,
<investment)
Political risk - Measurement - Answer-Profit Opportunity Recommendations Index
(POR) - BERI, Low (70-100), Moderate (59-69), High risk (40-54), Prohibitive risk (0-39)
Strategies for mitigating political risk - Answer-monitor political developments/insurance
General global environment - Answer-political/geal enviro in home/host & general global
enviro
The legal environment - Answer-laws/regulations impact business = political decision
