With Regard to the OIP

question 52

Multiple Choice

With regard to the OIP,

• A)the composition of the optimal international portfolio is identical for all investors,regardless of home country.
• B)the composition of the optimal international portfolio are varies depending upon the numeraire currency used to measure returns.
• C)the composition of the optimal international portfolio is identical for all investors,regardless of home country,if they hedge their risk with currency futures contracts.
• D)the composition of the optimal international portfolio are varies depending upon the numeraire currency used to measure returns,and the composition of the optimal international portfolio is identical for all investors (regardless of home country)if they hedge their risk with currency futures contracts.

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Definitions:

Working Capital Investment

The funds invested in the short-term assets of a company, such as inventory and receivables, to support its daily operations.

Salvage Value

The estimated residual value of an asset at the end of its useful life, important for calculating depreciation.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows or to evaluate the attractiveness of an investment.

Incremental Cost Approach

A decision-making process that focuses on the changes in total cost resulting from a specific business decision, considering only the relevant costs and benefits that differ between alternatives.