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When considering the risk of a foreign investment, a higher risk might arise from exchange rate risk and political risk while lower risk might result from international diversification.

A) True
B) False

Correct Answer

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The cost of capital may be different for a foreign project than for an equivalent domestic project because foreign projects may be more or less risky.

A) True
B) False

Correct Answer

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If one U.S. dollar buys 0.63 euro, how many dollars can you purchase for one euro?


A) 1.0414
B) 1.1571
C) 1.2857
D) 1.4286
E) 1.5873

F) D) and E)
G) None of the above

Correct Answer

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