How do sanctions and aid interact with political risk and foreign investment climates?

• A. Sanctions always improve investment climates; aid worsens governance
• B. Sanctions do not affect risk-return profiles; aid is neutral
• C. Sanctions can alter risk-return profiles; aid can stabilize governance but can be misused; policy uncertainty affects investment and credit markets
• D. Sanctions and aid have no impact on investment decisions

Answer: (C)