Nominal Cash Flows in a Foreign Currency Should Be Discounted

question 21

Multiple Choice

Nominal cash flows in a foreign currency should be discounted ______.

• A) at a nominal discount rate in the foreign currency
• B) at a rate reflecting the parent's opportunity cost of capital in the domestic currency
• C) at a weighted average cost of capital
• D) at the cost of debt
• E) at the cost of equity

---

Definitions:

Monopolist's Supply

The quantity of goods or services a monopolist chooses to produce and sell, influenced by its market power to set prices.

Horizontal

In economics, horizontal can refer to a market situation where there are many competitors in the industry, but they all offer a similar product or service.

Profit-Maximizing

A strategy where businesses seek to achieve the highest possible profit from their operations, typically by adjusting output, pricing, and other variables.

Average Revenue

The amount of income generated per unit of sale, calculated by dividing total revenue by the quantity of goods sold.