Investment Decision Making Assignment Example | Topics and Well Written Essays - 2500 words

Investment Decision Making - Assignment ExampleMarket happen is considered to be un-diversifiable and accordingly investors expect a gamble premium to compensate them for taking on such risk of infection. (Bodie et al., 2002 Ross et al., 1999). Unsystematic risk otherwise known as firm specific risk or operating risk is risk that can be diversified away and therefore investors should not be compensated for taking on such risk. (Bodie et al., 2002 Ross et al., 1999).Prior to the Basel II accord, more emphasis was placed on hedging market risk. However, avocation from the Basel II accord, Operations risk herein referred to as OR began receiving greater attention. (Neu and Khn, 2003). The aim of this study is to psychoanalyze the problems and risks foreign companies that want to do business in United Arab Emirates and Venezuela are likely to face. In addition, the risk that the company may face in these countries pull up stakes also be analyzed with respect to apiece of the two countries. Risk associated with foreign investment whether direct or indirect are numerous.The opus will begin by presenting an overview of the risk situation of United Arab Emirates in part one, focusing on wholly the risks faced by foreign companies operating in this area. Part two analyse a connatural situation as in part one, but focusing on Venezuela. Part three of the paper contrast the situation based on the information presented in part one and two, while the make it section made an informed decision to investors as to which of the two countries to invest upon. 1.1.1 United Arab Emirates OverviewUnited Arab Emirates, UAE is a dry land in the Middle East bordering the Gulf of Oman and the Persian Gulf, between Oman and Saudi Arabia (IMF Economic narrative 2007). Potential markets indicators includeUnited Arab EmiratesPopulation (in millions)4.5Import of goods and services (millions $ ) 98.976GNP (in millions of USD)103.460The U.A.E. is considered one of the highest per- capita gross study products in the world (IMF Economic Report 2007). Although still heavily dependent on revenues from oil and gas, the country is relatively well-insulated from periods of low oil prices because of successful moves toward economic diversification, large foreign exchange reserves and afield investments. 1.1.2 United Arab Emirates Risk ProfileThis section of the paper looks at the overall risk situation of the UAE area. concern is paid on key change drivers and risk indicators such as political risk, economic risk, militant risk, exchange rate fluctuations etc. The section goes ahead and sees if there are some of these risks unique to the area. The writings surrounding operating risk has centred on its management (e.g., Lewis,