- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 5. Introduction to Geopolitics
- Subject 6. Incorporating Geopolitical Risk into the Investment Process
CFA Practice Question
Which statement is FALSE?
A. Among each type of these geopolitics tools there are tools that can be non-cooperative in nature.
B. It might be difficult to find the correct signposts without some trial and error.
C. The procedure of measuring geopolitical risk probability is relatively easy.
Explanation:
C is false. It is difficult as many risks are unpredictable. More collaborative and globalized nations are generally less likely to incur geopolitical risk due to the associated political, economic, and financial costs. Additionally, internal political stability, economic need, and governmental actors' incentives all contribute significantly to the likelihood of disruptive action.
A is true. Among each there are choices that reflect or improve cooperation and those that reflect or escalate conflict.
B is also true.
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