Which of the Following Is Probably the Best Method of Incorporating

question 39

Multiple Choice

Which of the following is probably the best method of incorporating country risk into a capital budgeting analysis?

• A) Adjusting the discount rate upward
• B) Adjusting the input variables to estimate the sensitivity of the project's NPV
• C) Adjusting the political risk rating to obtain a more favorable NPV
• D) Country risk should be ignored in capital budgeting, since it is a subjective analysis.

Comprehend the role of reserve currencies in global finance.

Assess the impact of foreign investment in domestic economic control.

Understand the dynamics of the current account balance and factors affecting it.

Analyze the effects of currency valuation changes on the current account balance.