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.

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Definitions:

Status Offense

A noncriminal act that is considered a violation of the law only because of the offender's status as a minor, such as truancy or running away from home.

Truancy

The action of staying away from school without permission, often reflecting underlying issues such as family problems or disengagement.

Suicide

The deliberate action of taking one's own life.

Status Offense

An action that is prohibited only to a certain class of people, and most often applied to behaviors forbidden to minors, such as truancy and underage drinking.