Identify the common factors used by MNCs to measure country risk. Explain how MNCs use the assessment of country risk when making financial decisions.

Assignment Question

Country risk represents the potentially adverse impact of a country’s environment on a multinational corporation (MNC)’s cash flows. An MNC conducts country risk analysis when it applies capital budgeting to determine whether to implement a new project or whether to continue conducting business in a particular country.

This project helps you understand how to measure country risk and incorporate country risk to achieve the maximization of firm value. Identify the common factors used by MNCs to measure country risk. Explain how MNCs use the assessment of country risk when making financial decisions.

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