Which of the following strategies will help in minimizing political risk in international capital budgeting decisions?
A) by hedging the cash flows using currency futures and options
B) structuring the financing of such investments as equity rather than as debt
C) structuring the financing of such investments as debt rather than as equity
D) financing the project, in whole or in part, in domestic currency

Question

Quizplus · Accepted Answer

Structuring the financing as debt rather than equity can minimize political risk because it may allow for more favorable treatment in the event of expropriation or other political actions, as debt obligations are often prioritized over equity.

Which of the Following Strategies Will Help in Minimizing Political