Question

Characterize the types of investments that are most vulnerable to political risk. Characterize those that are least vulnerable. Oil and natural gas pipelines are immobile and long lived. They are also very expensive. On a scale of 1 to 10, with 10 being highest, how vulnerable are they to political risk.

Answer 1

Answer:

The investments most vulnerable to political risk are those that depend directly on the balance of payments of a country, such as, for example, Bonds of the Republic, debt guaranteed with the nation.

After direct financing, there is the indirect financing of state companies such as electricity or oil companies.

The oil and natural gas pipelines are immobile and long-lived, they have high vulnerability because if there is a situation with the Government, there is immediately a scenario of uncertainty, so on the scale of 1 to 10 it would qualify as 8.