Which of the Following Statements Regarding International Projects Is FALSE

question 33

Multiple Choice

Which of the following statements regarding international projects is FALSE?

• A) Interest rates and costs of capital will likely be different in the foreign country as a result of the macroeconomic environment.
• B) The project will most likely generate foreign currency cash flows, although the managers and shareholders care about the foreign currency value of the project.
• C) Under internationally integrated capital markets, the value of an investment does not depend on the currency we use in the analysis.
• D) The firm will probably face a different tax rate in the foreign country and will be subject to both foreign and domestic tax codes.

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Definitions:

Yield To Maturity

The total return anticipated on a bond if it is held until it matures, including all paid interest and principal repayments.

Market Price

The ongoing financial rate for purchasing or selling an asset or service.

Par Value

The face value of a bond or the stock value stated in the corporate charter, not necessarily reflecting the market value.

Coupon Bond

A type of bond that offers periodic interest payments to its holder, typically paid semi-annually, until maturity.