Suppose a U.S. company invests $100,000 in a project in Italy. At the time, the exchange rate is $1.25 = 1.00. One year later, the exchange rate is the same. However, the Italian government has expropriated the company's assets, paying only 80,000 in compensation. This is an example of

Select one:

a.

market imperfections.

b.

comparative advantage.

c.

political risk.

d.

exchange rate risk.