CFA Level I · CFA Level I Exam · Introduction to Geopolitics
An investor in a multinational firm fears that a host government may take control of the firm's local assets. This concern is best described as:
The concern is best described as expropriation risk, which is the possibility that a host government seizes or takes control of private assets, often with inadequate compensation. It is a direct geopolitical and political risk to foreign direct investment, distinct from currency or tariff matters.
- Aexpropriation riskCorrect
- Bcurrency convertibility risk
- Ctariff pass-through risk
Explanation
Expropriation risk is the risk that a government seizes private assets, often with little or no compensation. Convertibility risk concerns the ability to exchange currency, and tariff pass-through concerns trade costs.
Did you get it right without looking?
One question tells you little. A timed set on Introduction to Geopolitics shows your real accuracy, how long you take and where you lose marks.
More Introduction to Geopolitics questions
- A country's government announces new sanctions that restrict a key export sector. For an investor holding the equities of firms in that sect…
- A government that mainly seeks to protect its territory, its citizens, and its political system from external threats is most likely pursuin…
- Which of the following developments is most likely to be associated with a trend of deglobalization?
- Compared with a bilateral agreement, a multilateral arrangement among many countries is most likely to:
- Which of the following non-state actors is most likely to influence geopolitical outcomes primarily through control of cross-border capital …
- In the curriculum's framework, which actor is most likely to be classified as a non-state actor?