CFAI Practice: M05 — Geopolitics

Total: 5 questions

Source: CFA Institute Practice Questions — Economics (2026)


Question 1

Which of the following best distinguishes geopolitics from globalization?

  • A. Geopolitics focuses on economic integration, while globalization focuses on political power
  • B. Geopolitics involves the use of political power to influence international relations, while globalization refers to the increasing interconnectedness of economies
  • C. Geopolitics and globalization are interchangeable terms describing international trade

Question 2

A government restricts financial transactions with a foreign nation to exert political pressure. This action is most accurately described as:

  • A. military intervention
  • B. diplomatic negotiation
  • C. economic sanctions

Question 3

Heightened geopolitical risk in a region most likely leads to which of the following effects on investment assets in that region?

  • A. Decreased risk premiums and higher asset valuations
  • B. Increased risk premiums and lower asset valuations
  • C. Unchanged risk premiums and stable asset valuations

Question 4

An analyst evaluating a portfolio concentrated in emerging markets should most likely consider geopolitical events because such events:

  • A. only affect currency markets and have no impact on equity returns
  • B. can cause sudden disruptions in trade, capital flows, and regulatory frameworks
  • C. are fully predictable using macroeconomic models

Question 5

Resource nationalism is best described as a government’s tendency to:

  • A. promote free trade in natural resources across borders
  • B. assert control over domestic natural resources to maximize national benefit
  • C. privatize state-owned enterprises in the extractive sector