According to Your Text, Which of the Following Is Not

question 62

Multiple Choice

According to your text, which of the following is not a factor that increases an MNC's cost of capital?

• A) higher exposure to exchange rate risk.
• B) higher exposure to country risk.
• C) an increase in the risk-free interest rate.
• D) an increase in the size of the MNC.

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Definitions:

Negative Net Present Value

A financial metric indicating that the present value of cash inflows is less than the present value of cash outflows, suggesting the investment is not financially viable.

Initial Cost

The upfront expense incurred to purchase an asset or to initiate a project.

Net Present Value

A calculation that compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account.

Required Rate

The minimum return an investor expects to achieve when investing in a particular asset or project.