The Home Currency Approach

question 67

Multiple Choice

The home currency approach:

• A)discounts all of a project's foreign cash flows using the current spot rate.
• B)employs uncovered interest parity to project future exchange rates.
• C)computes the net present value (NPV) of a project in the foreign currency and then converts that NPV into U.S. dollars.
• D)utilizes the international Fisher effect to compute the NPV of foreign cash flows in the foreign currency.
• E)utilizes the international Fisher effect to compute the relevant exchange rates needed to compute the NPV of foreign cash flows in U.S. dollars.

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Definitions:

Geert Hofstede

A Dutch social psychologist known for his research on cross-cultural groups and organizations, notably for pioneering the study of cultural dimensions affecting work behavior.

International Human Resource Management

the management of human resources in an international context, including understanding and managing diverse workforces across different cultures.

Domestic Issues

Problems or concerns that occur within a specific country, often related to social, economic, or political matters.

Performance Standards

Specific criteria and benchmarks used to measure and evaluate the performance of employees or processes within an organization.