1. Suppose you start with $100 and buy an LSE (London Stock Exchange) stock for 50 when the exchange rate is 1 = $2. One year later, the stock rises to 60. You are happy with your 20 percent return on the stock, but when you sell the stock and exchange your 60 for dollars, you only get $45 since the pound has fallen to 1 = $0.75. This loss of value is an example of
   1. political risk.
   2. exchange rate risk.
   3. market imperfections.
   4. weakness in the dollar.