Which of the Following Statements Is FALSE

question 40

Multiple Choice

Which of the following statements is FALSE?

• A)Many countries regulate or limit capital inflows or outflows,and many do not allow their currencies to be freely converted into dollars,thereby creating capital market segmentation.
• B)The existence of internationally integrated capital markets makes many decisions in international corporate finance more complicated but potentially more lucrative for a firm that is well positioned to exploit the market segmentation.
• C)Political,legal,social,and cultural characteristics that differ across countries may require compensation in the form of a country risk premium.
• D)Swaps allow firms to mitigate their exchange rate risk exposure between assets and liabilities,while still making investments and raising funds in the most attractive locales.

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Definitions:

Operating Costs

Expenses associated with running a business's core activities on a day-to-day basis, such as salaries, rent, and utilities.

Discount Rate

The discount rate that is employed during discounted cash flow evaluation to ascertain the present valuation of future expected cash flows.

Simple Rate of Return

A financial metric that calculates the gain or loss of an investment over a specific period as a percentage of the investment's initial cost.

Cash Outflows

Payments or expenditures made by a business or individual, resulting in a decrease in cash balance.