When Assessing the Additional Risk That Can Occur from Investing

question 1

Multiple Choice

When assessing the additional risk that can occur from investing abroad, firms may choose to account for risk via:

• A) adjusting the cash flows.
• B) adjusting the discount rates.
• C) adjusting both cash flows and discount rates.
• D) adjusting all of the above.

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Definitions:

Disclosure

A requirement by corporations to provide shareholders and the public with accurate financial information, revealing the full financial performance and risks of the firm.

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's profits.

AASB 101

An accounting standard issued by the Australian Accounting Standards Board that prescribes the basis for presentation of general purpose financial statements.

Statement of Changes

A financial statement that shows how the equity of a company has changed over a certain period due to various reasons like profits, losses, or distributions.