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Suppose your firm invests $ 1 0 0 , 0 0 0 in a project in Italy. At the time the exchange rate is .

Suppose your firm invests $

100, 000

in a project in Italy. At the time the exchange rate is

.

One year later the

exchange rate is the same, but the Italian government has expropriated your firm's assets paying only in

compensation. This is an example of

Multiple Choice

political risk.

exchange rate risk.

none of the options, since

.

market imperfections.

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