Question 1

Ratings and weights to be assigned to all factors relevant in assessing country risk are required in the checklist approach.

a) True

b) False

Question 2

When the administrative fees are charged by the parent, the earnings of the subsidiary from the project will appear high to the parent and low to the subsidiary.

a) True

b) False

Question 3

If the return on the forced reinvestment in the foreign country is less than the required rate of return on the project, blocked funds may penalise the project

a) True

b) False

Question 4

It is reasonable to expect a higher cost of capital in an emerging country than in the U.S but this is not because of the risk-free rate.

a) True

b) False