Which One of the Following Statements About Foreign Investments Is

question 17

Multiple Choice

Which one of the following statements about foreign investments is true?

• A) In general, major foreign markets always tend to underperform the Australian market.
• B) Foreign markets include equity securities only.
• C) Investing in foreign markets will always produce higher returns because of exchange rate fluctuations.
• D) Investing in foreign markets may involve specific risks not encountered with domestic securities.

---

Definitions:

Contribution Margin Ratio

The percentage of each sales dollar that remains after variable costs are subtracted, indicating the portion contributing to covering fixed costs and generating profit.

Fixed Monthly Expenses

Recurring costs that do not vary in amount and are paid on a monthly basis, such as rent or loan payments.

Net Operating Income

Earnings from a company's core business operations, excluding deductions for interest and taxes.

Margin Of Safety

The excess of budgeted or actual dollar sales over the break-even dollar sales.