Identify some political and currency risks of that country and discuss why a U.S. company would invest (for example, build a factory) in that country. Also discuss some of the various international finance topics such as the foreign exchange market, purchasing power parity, interest rate parity, cross rates, and so on. Why is it important for international firms to understand these concepts?

A US company looking to build a factory in a foreign country would need to consider the various political and currency risks associated with such an investment. Political risk refers to the potential for changing government policies which could affect companies operating within a given country or region and these can range from changes in taxation laws, labor regulations etc. Currency risks refer to fluctuations in exchange rates which may also have an effect on costs associated with goods and services purchased/sold as well as profits earned overseas.

When investing abroad, it is important for international firms to understand some of the various international finance topics such as foreign exchange markets, purchasing power parity, interest rate parity and cross rates. The foreign exchange market allows investors to purchase different currencies at varying prices and understanding this concept helps inform decisions related with conversion costs among multiple countries; purchasing power parity compares prices across countries while accounting for differences associated with inflationary pressures; interest rate parity examines the relationship between interest rates paid on investments denominated by different currencies; finally, cross rates are used when comparing two currencies that are not directly linked via direct currency pairs.

By understanding these concepts, firms are able to identify potential opportunities available in global markets as well as minimize their exposure towards any risks associated with investing outside of their home countries. This knowledge allows them make informed decisions about where they should invest capital resources so they may maximize returns based on prevailing market conditions at any point in time