One Method of Analyzing a Foreign Investment Opportunity Is to Treat

question 33

Multiple Choice

One method of analyzing a foreign investment opportunity is to treat all risk as a single problem by adjusting the discount rate applicable.For countries with significant political and economic risks,the:

• A)discount rates are revised upward.
• B)discount rates are revised downward.
• C)early cash flows are not adjusted.
• D)distant cash flows are heavily penalized.

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Definitions:

Foreign Currency

Currency used in a country other than one's own, exchanged for goods, services, or to conduct financial transactions.

Australian Dollars

The currency of Australia, represented by the symbol AUD and used throughout the country.

Tax

Tax is a compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization to fund government spending and various public expenditures.

Brazilian Real

The official currency of Brazil, abbreviated as BRL, and symbolized by "R$".