The Home Currency Approach

question 67

Multiple Choice

The home currency approach:

• A)discounts all of a project's foreign cash flows using the current spot rate.
• B)employs uncovered interest parity to project future exchange rates.
• C)computes the net present value (NPV) of a project in the foreign currency and then converts that NPV into U.S. dollars.
• D)utilizes the international Fisher effect to compute the NPV of foreign cash flows in the foreign currency.
• E)utilizes the international Fisher effect to compute the relevant exchange rates needed to compute the NPV of foreign cash flows in U.S. dollars.

---

Definitions:

Southern Strategy

A political strategy adopted by some U.S. political parties and candidates to gain support in the Southern states by appealing to racial biases and segregationist sentiments.

Gerrymandering

The practice of manipulating the boundaries of electoral districts to favor one party or class, often resulting in disproportionate political representation.

Southern Strategy

A Republican Party electoral strategy to increase political support among white voters in the South by appealing to racism against African Americans.

Racial Dog Whistling

The use of coded language and messages in political discourse to appeal to racial biases and prejudices without explicit racism.