Answer in numbered format using the sources that are provided throughout and at end. Use at least 3 sources any additional sources can be added after. 

There are several risks associated with operating a multinational corporation. Anycompany doing business in a foreign country has to consider political or country risks. Especially if the target country has a relatively unstable political environment, financial managers must incorporate the potential risk into the cost of the project.

Discuss the following statements/questions:

1. Given the risks associated with an MNC, discuss why a firm would choose to operate as an MNC.
2. Describe political risk on a macro and micro level and provide examples of each.
3. Why is the repatriation of cash flows from an overseas project considered critical?

Sources:

Fabozzi, F. J. & Peterson Drake, P. (2009). Finance: Capital Markets, Financial Management, and Investment Management. New Jersey: Wiley. (See Chapter below).

• Chapter 16: Financial Risk Management

Video Links

• Introduction to Foreign Exchange Markets: https://www.youtube.com/watch?v=UnVIEX1P2IE
• Currency Risk (An explanation of currency risk): https://www.youtube.com/watch?v=94XJJCINMuU
• Risk factors in a forward foreign currency contract: https://www.youtube.com/watch?v=OUEknl19WcU

International cost of capital: https://www.youtube.com/watch?v=fD_hhR-GHO0