Question

Renault paid 1 billion USD to acquire a 25 percent ownership stake in the Russian automaker AvtoVAZ in 2008. Just one year later, Russian Prime Minister Vladimir Putin threatened to dilute the Renault ownership stake unless it contributed more money to prop up AvtoVAZ, which was then experiencing a significant slide in sales. This is an example of ________ risk.

Answer 1

Answer:

political risks

Explanation:

• There are many sources of risk in any type of investment. Most obviously financial risks. If the general financial situation is not adequately assessed, investment is likely to fall. For example, unfavorable depression may occur in the following months, etc. Currency risk is tied to the state's fiscal policy of using currency. Management risks (CEO changes, etc.) are risks associated with stress. In this case, risk is not related to those concepts
• We have a political nature intervention in the economics of big business. Those risks are known as political risk and can occur very often, especially when the global market is disrupted by barriers and trade barriers. Therefore, many companies are on foreign soil (or there are shares) and local political pressures affect them.