Even Though a Foreign Stock That Appears to Be Overvalued

question 20

True/False

Even though a foreign stock that appears to be overvalued in its own country, the stock may not generate a reasonable return for a U.S. investor if the currency of that country appreciates against the U.S. dollar.

---

Definitions:

Cash Constraints

Financial limitations that restrict the ability to purchase or invest due to the unavailability of liquid assets or cash.

Opportunity Costs

The cost of foregone alternatives when one option is chosen over another, representing the benefits that could have been received by taking the alternate action.

Expected NPV

Net Present Value expected from an investment, taking into account the probability of various outcomes.

Full-Ride Scholarship

A scholarship that covers all the expenses of a student’s education, including tuition, room, board, and possibly other costs.