If the Correlation of Returns Between Foreign Projects and Domestic

question 108

Multiple Choice

If the correlation of returns between foreign projects and domestic projects is less than 1.0,then:

• A) foreign projects should be discounted with a higher rate.
• B) the domestic firm would be better off without the foreign projects.
• C) the foreign project may not add much risk to the existing domestic operation.
• D) the foreign projects will experience a higher degree of inflation.

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Definitions:

Repression

A defense mechanism where unpleasant thoughts, memories, or desires are excluded from conscious awareness.

Defence Mechanism

Psychological strategies used by individuals to cope with reality and maintain self-image by unconsciously denying or distorting reality.

Repression

A defense mechanism where an individual unconsciously pushes disturbing thoughts, desires, or experiences out of conscious awareness.

Anxiety

A mental health disorder characterized by feelings of worry, anxiety, or fear that are strong enough to interfere with one’s daily activities.