30 Questions
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?
Exogenous risk
What is an example of event risk mentioned in the text?
United Kingdom's referendum on European Union membership
What is the impact of the United Kingdom's vote to end its European Union membership on asset classes?
Equities and government bonds were immediately affected
What does the predictability of an event change according to the text?
Likelihood, speed of impact, and size of impact on investors
What is the purpose of using political calendars in assessing event risk?
To identify set dates for known events
Which of the following factors may increase the likelihood of disruptive action?
All of the above
According to the text, what are geopolitical risk monitoring tools?
Tools used by researchers to study geopolitical risks
Which of the following risks was described as the most likely to occur and affect a given investment strategy?
Cyber risk
What is the velocity of geopolitical risk?
The pace at which geopolitical risk affects an investor portfolio
How does the impact of geopolitical risk manifest in investor portfolios?
All of the above
Which of the following is an example of a cooperative economic tool mentioned in the text?
Common markets
What is the purpose of nationalization mentioned in the text?
To secure foreign exchange
Which organization facilitates the global harmonization of tariff rules?
World Trade Organization (WTO)
What is the purpose of voluntary export restraints mentioned in the text?
To assert economic control
What is the purpose of imposing domestic content requirements on exported goods mentioned in the text?
To assert economic control
Which of the following is an example of a non-cooperative financial tool mentioned in the text?
Limiting access to local currency markets
What is one potential vulnerability created by the dominance of the US dollar in the international system?
Changes in US monetary policy affecting other countries
Which organization seeks to facilitate economic, political, security, military, educational, and cultural integration between its member states?
Association of Southeast Asian Nations (ASEAN)
What is one potential impact of geopolitical risk and the tools of geopolitics on comparative advantage?
Higher compensation for risk taken by investors
What is one potential benefit of specialization and exchange between countries?
Increased economies of scale and variety of products available
Which one of these is true about discrete impacts?
They only affect one company or sector at a time.
When assessing geopolitical risk for portfolio management, what factors should investors consider?
Likelihood, velocity, and size and nature of impact
What is scenario analysis?
The process of evaluating portfolio outcomes across potential circumstances or states of the world
What is one form of a simple quantitative scenario?
A stylized scenario measuring portfolio sensitivity against key factors
What is one challenge in quantitative scenario analysis?
The secondary and linked impacts of geopolitical risks to securities
Which of the following is an example of exogenous risk mentioned in the text?
The earthquake and tsunami in Japan
What is the impact of the earthquake on Japanese equity markets?
Equities fell
Which country decided to phase out nuclear power entirely after the nuclear accident in Japan?
Germany
What is an example of a thematic risk mentioned in the text?
Climate change
What was the impact of the Equifax data breach on the company's equity price?
Equifax's equity price fell
Test your knowledge on exogenous risks and their impact on countries and non-state actors. Explore examples of sudden uprisings, invasions, and natural disasters, such as the devastating earthquake and tsunami in Japan in 2011.
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