Exogenous Risks
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Questions and Answers

Which type of geopolitical risk is characterized by sudden or unanticipated events that affect a country's cooperative stance or the ability of non-state actors to globalize?

  • Political risk
  • Exogenous risk (correct)
  • Thematic risk
  • Event risk

    • What is an example of event risk mentioned in the text?

  • Changes in investor expectations
  • Natural disasters
  • Sudden uprisings
  • United Kingdom's referendum on European Union membership (correct)

    • What is the impact of the United Kingdom's vote to end its European Union membership on asset classes?

  • Government bonds and the national currency were immediately affected
  • Equities and the national currency were immediately affected
  • Equities and government bonds were immediately affected (correct)
  • All asset classes were immediately affected

    • What does the predictability of an event change according to the text?

    <p>Likelihood, speed of impact, and size of impact on investors</p> Signup and view all the answers

    What is the purpose of using political calendars in assessing event risk?

    <p>To identify set dates for known events</p> Signup and view all the answers

    Which of the following factors may increase the likelihood of disruptive action?

    <p>All of the above</p> Signup and view all the answers

    According to the text, what are geopolitical risk monitoring tools?

    <p>Tools used by researchers to study geopolitical risks</p> Signup and view all the answers

    Which of the following risks was described as the most likely to occur and affect a given investment strategy?

    <p>Cyber risk</p> Signup and view all the answers

    What is the velocity of geopolitical risk?

    <p>The pace at which geopolitical risk affects an investor portfolio</p> Signup and view all the answers

    How does the impact of geopolitical risk manifest in investor portfolios?

    <p>All of the above</p> Signup and view all the answers

    Which of the following is an example of a cooperative economic tool mentioned in the text?

    <p>Common markets</p> Signup and view all the answers

    What is the purpose of nationalization mentioned in the text?

    <p>To secure foreign exchange</p> Signup and view all the answers

    Which organization facilitates the global harmonization of tariff rules?

    <p>World Trade Organization (WTO)</p> Signup and view all the answers

    What is the purpose of voluntary export restraints mentioned in the text?

    <p>To assert economic control</p> Signup and view all the answers

    What is the purpose of imposing domestic content requirements on exported goods mentioned in the text?

    <p>To assert economic control</p> Signup and view all the answers

    Which of the following is an example of a non-cooperative financial tool mentioned in the text?

    <p>Limiting access to local currency markets</p> Signup and view all the answers

    What is one potential vulnerability created by the dominance of the US dollar in the international system?

    <p>Changes in US monetary policy affecting other countries</p> Signup and view all the answers

    Which organization seeks to facilitate economic, political, security, military, educational, and cultural integration between its member states?

    <p>Association of Southeast Asian Nations (ASEAN)</p> Signup and view all the answers

    What is one potential impact of geopolitical risk and the tools of geopolitics on comparative advantage?

    <p>Higher compensation for risk taken by investors</p> Signup and view all the answers

    What is one potential benefit of specialization and exchange between countries?

    <p>Increased economies of scale and variety of products available</p> Signup and view all the answers

    Which one of these is true about discrete impacts?

    <p>They only affect one company or sector at a time.</p> Signup and view all the answers

    When assessing geopolitical risk for portfolio management, what factors should investors consider?

    <p>Likelihood, velocity, and size and nature of impact</p> Signup and view all the answers

    What is scenario analysis?

    <p>The process of evaluating portfolio outcomes across potential circumstances or states of the world</p> Signup and view all the answers

    What is one form of a simple quantitative scenario?

    <p>A stylized scenario measuring portfolio sensitivity against key factors</p> Signup and view all the answers

    What is one challenge in quantitative scenario analysis?

    <p>The secondary and linked impacts of geopolitical risks to securities</p> Signup and view all the answers

    Which of the following is an example of exogenous risk mentioned in the text?

    <p>The earthquake and tsunami in Japan</p> Signup and view all the answers

    What is the impact of the earthquake on Japanese equity markets?

    <p>Equities fell</p> Signup and view all the answers

    Which country decided to phase out nuclear power entirely after the nuclear accident in Japan?

    <p>Germany</p> Signup and view all the answers

    What is an example of a thematic risk mentioned in the text?

    <p>Climate change</p> Signup and view all the answers

    What was the impact of the Equifax data breach on the company's equity price?

    <p>Equifax's equity price fell</p> Signup and view all the answers

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