When an MNC Needs to Finance a Portion of a Foreign

question 46

Multiple Choice

When an MNC needs to finance a portion of a foreign project within the foreign country, the best method to account for a foreign project's risk is to:

• A) apply a required return that is based on the CAPM.
• B) apply a required return based on unsystematic risk.
• C) derive the net present value of the equity investment.
• D) apply the required return equal to the risk-free rate in the foreign country.

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