Question 1: Describe different factors which find out the extent of political risk?
Question 2: Describe various methods of measuring the country risk.
Question 3: Describe the case of scenario of developing country in terms of political and country risk with appropriate illustrations?
Question 4: Illustrate the process of political risk management and how do you evaluate the economic health of a nation.
Question 5: How economic policies of a nation are influenced by political risk?
Question 6: Illustrate the problems faced in determining the cost of equity capital compared to other securities? In brief explain the approaches to determination of such a cost.
Question 7: The weighted average cost of capital is superior to the marginal cost of capital as a discount rate to assess the capital budgeting of a project. Describe the rationale all along with a suitable example.
Question 8: If the parent’s cost of capital is 12 %, its equity investment in a subsidiary thus is equivalent to 12 %. Do you agree? If not, explain why not?
Question 9: We should always borrow in a currency that is likely to devalue as it minimizes financial costs. Do you think it is a good rule of thumb? Describe.
Question 10: What factors might cause increase in the cost of capital as the debt or equity ratio rises?
Question 11: What factors must be considered in deciding whether the cost of capital for a foreign affiliate must be higher, lower or the same as the cost of capital for comparable domestic operation?