Answer to Question #7438 in Finance for LaMarcus Streeter
Determine the most significant risk factors associated with investing in the company you selected when compared with investing in a domestic company. Provide specific examples to support your response.
Unfortunately, there is always some degree of risk present in every investment one makes. In my opinion, the valuation risk is the most apparent. The danger of investing in companies that appear overvalued is that there is normally little room for error. The business of CAT Inc. may indeed be wonderful, but if it experiences a significant sales decline in one quarter or does not open new locations as rapidly as it originally projected, the stock will decline significantly.
Unlike the domestic companies, large multinational ones could possibly have interest rate risk, because of different currencies involved in everyday transactions.
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