Final answer:
Governments are required to disclose all types of investment risks including credit, custodial credit, and foreign currency risks, making 'd. all of the above' the correct answer.
Step-by-step explanation:
Governments need to be transparent about these risks because high levels of foreign investment, especially in the form of short-term portfolio investments, can lead to a precarious situation. Foreign investors are sensitive to indications that might suggest a country's inability to repay its debts or a potential drop in the exchange rate. This sensitivity is due to the nature of short-term investments, which are easier to withdraw in contrast to foreign direct investments, which are generally more stable and require a longer procedure to divest.
Credit risk refers to the possibility that a government may default on its debt obligations. Custodial credit risk is concerned with the risk of losing investments due to a counterparty's inability to fulfill its obligations. Finally, foreign currency risk involves potential losses from fluctuations in exchange rates that can affect the value of foreign investments. As such, all these categories are pertinent to disclose to provide an accurate assessment of an investment's risk profile.