According to the Text, the Most Appropriate Method of Incorporating

question 15

Multiple Choice

According to the text, the most appropriate method of incorporating country risk into capital budgeting analysis is to:

• A) compare each form of a country risk rating to a benchmark level.
• B) estimate the effect of each form of country risk on cash flows.
• C) estimate the effect of each form of country risk on the income statement and balance sheet.
• D) adjust the discount rate to reflect the level of country risk using the conventional adjustment formula that is used by virtually all MNCs.

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