Which of the Following Statements Is FALSE

question 8

Multiple Choice

Which of the following statements is FALSE?

• A)If the foreign project is owned by a domestic corporation,managers and shareholders need to determine the home currency value of the foreign currency cash flows.
• B)The most obvious difference between a domestic project and a foreign project is that the foreign project will most likely generate cash flows in a foreign currency.
• C)The risk of the foreign project is unlikely to be exactly the same as the risk of domestic projects (or the firm as a whole),because the foreign project contains residual exchange rate risk that the domestic projects often do not contain.
• D)In an internationally integrated capital market,two equivalent methods are available for calculating the NPV of a foreign project: Either we can calculate the NPV in the foreign country and convert it to the local currency at the forward rate,or we can convert the cash flows of the foreign project into the local currency and then calculate the NPV of these cash flows.

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Definitions:

Nature

The inherent characteristics and qualities of a person or thing, or the physical world collectively, including plants, animals, the landscape, and other features of the earth.

Nurture

The process of caring for and encouraging the growth or development of someone or something, often highlighting the influence of environment and upbringing.

Independent Variable

The factor in a study that is deliberately altered or varied to determine its impact on the outcome variable.

Preliterate Cultures

describes societies that do not employ written language and often rely on oral tradition for the transmission of culture, history, and knowledge.