For Purposes of International Capital Budgeting, Which of the Following

question 46

Multiple Choice

For purposes of international capital budgeting, which of the following statements is NOT true?

• A) Managers must evaluate political risk because political events can drastically reduce the value or availability of expected cash flows.
• B) Parent cash flows must be distinguished from project cash flows. Each of these two types of flows contributes to a different view of value.
• C) An array of nonfinancial payments can generate cash flows from subsidiaries to the parent, including payment of license fees and payments for imports from the parent.
• D) All of the above are true statements.

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Definitions:

Par Value

The nominal or face value of a bond, stock, or other financial instrument, representing the amount to be repaid at maturity.

Market Price

Market price is the current price at which an asset or service can be bought or sold in a competitive marketplace.

Stock Dividend

A form of dividend payment made by a company to its shareholders in the form of additional shares, rather than cash.

Par Value

The nominal or face value of a stock or bond as stated by the issuing company, often used in legal documents.