Which one of the following most likely represents the greatest political risk for a U.S.-based firm?

1. A Boeing airplane assembly plant located in Canada
2. A Koch Industries oil refinery in a port in Venezuela
3. A Merck pharmaceutical sales office in Germany
4. A Ford automotive parts plant in Korea that uses U.S. made components

Suppose you could buy 1,320 South Korea won or 78 Pakistan rupees last year for $1. Today, $1 will buy you 1,318 won or 80 rupees. Which one of the following occurred over the past year?

1. The won depreciated against the dollar
2. The dollar depreciated against the rupee
3. The rupee depreciated against the dollar
4. The dollar appreciated against both the won and the rupee

Suppose a U.S. firm builds a factory in China, staffs it with Chinese workers, uses materials supplied by Chinese companies, and finances the entire operation with a loan from a Chinese bank located in the same town as the factory. This firm is most likely trying to greatly reduce, or eliminate, which of the following?

1. Short-run exposure to exchange rate risk
2. Long-run exposure to exchange rate risk
3. Translation exposure to exchange rate risk
4. Political risk associated with the foreign operations