If Financial Markets Are Segmented, and If Firms in the U.S

question 18

Multiple Choice

If financial markets are segmented, and if firms in the U.S. are not subject to the same barriers of international investment, then this could lead to _____ risk premiums on international projects.

• A) higher
• B) zero
• C) negative
• D) lower
• E) infinite

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Definitions:

Debt Securities

Financial instruments representing a loan made by an investor to a borrower, typically including bonds, notes, and bills.

Equity Securities

Financial instruments representing ownership in a company, such as stocks.

Investment

The allocation of resources, such as time, money, or effort, in the expectation of generating an income or profit.

Dividend Yield

A metric indicating the proportion of a company's annual dividends in relation to its share price.