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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