Which of the Following Strategies Will Help in Minimizing Political

question 74

Multiple Choice

Which of the following strategies will help in minimizing political risk in international capital budgeting decisions?

• A) by hedging the cash flows using currency futures and options
• B) structuring the financing of such investments as equity rather than as debt
• C) structuring the financing of such investments as debt rather than as equity
• D) financing the project, in whole or in part, in domestic currency

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Definitions:

Dividends Increase

An action by a company to increase the amount of dividends paid to shareholders, typically signaling confidence in the company's profitability.

Rate of Return

The success or failure of an investment over a determined timeframe, depicted as a percentage of the investment’s original stake.

Constant Dividend

A policy where a company pays out a fixed amount in dividends to shareholders on a regular basis, regardless of the company's earnings fluctuations.