Asked by Shalara Santana on Jun 19, 2024
Verified
Which of the following is NOT a factor that should be considered when deciding whether the required rate of return for international projects should be different from that of similar domestic projects?
A) International market segmentation.
B) Risk of expropriation.
C) Foreign exchange controls.
D) Foreign taxes.
E) Interest rates.
Required Rate
The minimum expected rate of return on an investment that an investor demands, taking into account the risk level of the investment.
International Projects
Ventures or operations undertaken by businesses or organizations that involve cross-border investments and activities.
Market Segmentation
A marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs and priorities, and then designing and implementing strategies to target them.
- Gain insight into the essential principles of foreign exchange markets and their functions.
- Comprehend the hazards associated with exchange rates and their effects on global financial operations.
Verified Answer
SR
SOUBHANGI RAJKHOWAJun 20, 2024
Final Answer :
E
Explanation :
Interest rates are a factor in determining the cost of capital and affect both domestic and international projects similarly. They are not a specific consideration that would lead to a different required rate of return for international projects compared to domestic ones. Factors like international market segmentation, risk of expropriation, foreign exchange controls, and foreign taxes directly impact the risk and potential returns of international projects, making them specific considerations for adjusting the required rate of return.
Learning Objectives
- Gain insight into the essential principles of foreign exchange markets and their functions.
- Comprehend the hazards associated with exchange rates and their effects on global financial operations.