Which of the Following Statements Is FALSE

question 40

Multiple Choice

Which of the following statements is FALSE?

• A)Many countries regulate or limit capital inflows or outflows,and many do not allow their currencies to be freely converted into dollars,thereby creating capital market segmentation.
• B)The existence of internationally integrated capital markets makes many decisions in international corporate finance more complicated but potentially more lucrative for a firm that is well positioned to exploit the market segmentation.
• C)Political,legal,social,and cultural characteristics that differ across countries may require compensation in the form of a country risk premium.
• D)Swaps allow firms to mitigate their exchange rate risk exposure between assets and liabilities,while still making investments and raising funds in the most attractive locales.

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Definitions:

Prenuptial Agreement

A legal document signed before marriage outlining the division of assets should the marriage end.

Assets

Resources owned by a person or entity that are expected to provide future economic benefits.

Intermediate Microeconomics

A branch of economics dealing with the behavior of individuals and firms in making decisions on the allocation of scarce resources.

Behavioral Economic Explanation

A behavioral economic explanation refers to analysis that incorporates psychological insights into human behavior to explain economic decision-making.