1. Exam (elaborations) FIN4802 Assignment 1 (COMPLETE ANSWERS) 2025
(244150) - DUE 21 May 2025
Course International Financial Management (FIN4802) Institution University Of
South Africa (Unisa) Book International Financial Management FIN4802
Assignment 1 (COMPLETE ANSWERS) 2025 (244150) - DUE 21 May 2025; 100%
TRUSTED Complete, trusted solutions and explanations.. Ensure your success with
us. ..
Question 1 (8 Marks) Mkhize Ltd would like to assess the country risk of South
Africa. Mkhize Ltd has identified various political and financial risk factors, as
shown below. Political Risk Factor Assigned Rating Assigned Weight Blockage
of fund transfers 7 65% Bureaucracy 3 55% Financial Risk Factor Assigned
Rating Assigned Weight Interest rate 5 30% Inflation 6 20% Exchange rate 5
11% Competition 4 35% Growth 7 30% Mkhize Ltd has assigned an overall
rating of 85 percent to political risk factors and of 35 percent to financial risk
factors. The investment policy for Mkhize Ltd mentions that the company can
only invest in a country if the country's risk is below 8.5. Should Mkhize Ltd
consider South Africa for investment? [8]
Step 1: Calculate the Political Risk Score The political risk score is calculated by
multiplying the rating of each political risk factor by its respective weight and then
summing these values.
Formula for Political Risk Score:
Political Risk Score
∑ ( Rating × Weight ) Political Risk Score=∑(Rating×Weight) Calculations:
Blockage of fund transfers:
Contribution
7 × 0.65
4.55 Contribution=7×0.65=4.55 Bureaucracy:
, Contribution
3 × 0.55
1.65 Contribution=3×0.55=1.65 Total Political Risk Score:
4.55 + 1.65
6.2 4.55+1.65=6.2 Now, we apply the overall weight for political risk (85%) to this
score:
Formula for Weighted Political Risk:
Weighted Political Risk
Political Risk Score × Political Risk Weight
Weighted Political Risk=Political Risk Score×Political Risk Weight Calculation:
6.2 × 0.85
5.27 6.2×0.85=5.27 Step 2: Calculate the Financial Risk Score The financial risk score
is calculated by multiplying the rating of each financial risk factor by its respective
weight and summing these values.
Formula for Financial Risk Score:
Financial Risk Score
∑ ( Rating × Weight ) Financial Risk Score=∑(Rating×Weight) Calculations:
Interest rate:
Contribution
5 × 0.30
1.5 Contribution=5×0.30=1.5 Inflation:
(244150) - DUE 21 May 2025
Course International Financial Management (FIN4802) Institution University Of
South Africa (Unisa) Book International Financial Management FIN4802
Assignment 1 (COMPLETE ANSWERS) 2025 (244150) - DUE 21 May 2025; 100%
TRUSTED Complete, trusted solutions and explanations.. Ensure your success with
us. ..
Question 1 (8 Marks) Mkhize Ltd would like to assess the country risk of South
Africa. Mkhize Ltd has identified various political and financial risk factors, as
shown below. Political Risk Factor Assigned Rating Assigned Weight Blockage
of fund transfers 7 65% Bureaucracy 3 55% Financial Risk Factor Assigned
Rating Assigned Weight Interest rate 5 30% Inflation 6 20% Exchange rate 5
11% Competition 4 35% Growth 7 30% Mkhize Ltd has assigned an overall
rating of 85 percent to political risk factors and of 35 percent to financial risk
factors. The investment policy for Mkhize Ltd mentions that the company can
only invest in a country if the country's risk is below 8.5. Should Mkhize Ltd
consider South Africa for investment? [8]
Step 1: Calculate the Political Risk Score The political risk score is calculated by
multiplying the rating of each political risk factor by its respective weight and then
summing these values.
Formula for Political Risk Score:
Political Risk Score
∑ ( Rating × Weight ) Political Risk Score=∑(Rating×Weight) Calculations:
Blockage of fund transfers:
Contribution
7 × 0.65
4.55 Contribution=7×0.65=4.55 Bureaucracy:
, Contribution
3 × 0.55
1.65 Contribution=3×0.55=1.65 Total Political Risk Score:
4.55 + 1.65
6.2 4.55+1.65=6.2 Now, we apply the overall weight for political risk (85%) to this
score:
Formula for Weighted Political Risk:
Weighted Political Risk
Political Risk Score × Political Risk Weight
Weighted Political Risk=Political Risk Score×Political Risk Weight Calculation:
6.2 × 0.85
5.27 6.2×0.85=5.27 Step 2: Calculate the Financial Risk Score The financial risk score
is calculated by multiplying the rating of each financial risk factor by its respective
weight and summing these values.
Formula for Financial Risk Score:
Financial Risk Score
∑ ( Rating × Weight ) Financial Risk Score=∑(Rating×Weight) Calculations:
Interest rate:
Contribution
5 × 0.30
1.5 Contribution=5×0.30=1.5 Inflation:
