Cost of capital and capital budgeting

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Reference no: EM131503167

1. The U.S. dollar suddenly changes in value against the euro moving from an exchange rate of $0.08909/euro to $0.08709/€. Thus, the dollar has ________ by ________.

A) appreciated; 2.30%

B) depreciated; 2.30%

C) appreciated; 2.24%

D) depreciated; 2.24%

2. Which following statement is Incorrect?

A) MNEs must modify finance theories like cost of capital and capital budgeting because of foreign complexities.

B) Multinational enterprises (MNEs) are firms, both for profit companies and not-for-profit organizations, which have operations in more than one country, and conduct their business through foreign subsidiaries, branches, or joint ventures with host country firms.

C) Eurocurrencies are domestic currencies of one country on deposit in a second country.

D) Comparative advantage was once the cornerstone of international trade theory, but today it is archaic, simplistic, and irrelevant for explaining investment choices made by MNEs.

Reference no: EM131503167

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