Products & Their RisksQuestion 145 of 398

Political risk is most relevant to an investor who:

a.Buys short-term U.S. Treasury bills

b.Invests in securities of companies operating in countries with unstable governments

c.Holds a diversified basket of U.S. blue-chip stocks

d.Purchases FDIC-insured certificates of deposit

Explanation

Political risk is the danger that a government's actions, such as expropriation, war, or sudden regulatory change, will hurt the value of investments in that country. It is especially significant for investments in emerging or unstable markets. Stable-government instruments such as U.S. Treasuries carry very little political risk.

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Political risk is most relevant to an investor who:

Explanation

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