Allmax is concerned that its subsidiary in Venezuela could be expropriated (seized) by the host government without compensation within the next few years. The type of risk Allmax faces with its Venezuelan subsidiary is termed ______ risk.
A)pure play
B)political
C)international beta coefficient
D)foreign exchange
E)global business

Question

Allmax is concerned that its subsidiary in Venezuela could be expropriated (seized) by the host government without compensation within the next few years. The type of risk Allmax faces with its Venezuelan subsidiary is termed ______ risk. 
A)pure play
B)political
C)international beta coefficient
D)foreign exchange
E)global business

Quizplus · Accepted Answer

Political risk refers to the likelihood of a host government taking actions that negatively affect a foreign investor's operations or assets, such as expropriation without compensation. In this case, Allmax is concerned about the possibility of its Venezuelan subsidiary being seized without compensation by the host government, indicating that it faces political risk.

Allmax Is Concerned That Its Subsidiary in Venezuela Could Be