The home currency approach A generally produces more reliable results than

The home currency approach a generally produces more

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34. The home currency approach: A. generally produces more reliable results than those found using the foreign currency approach.B. requires an applicable exchange rate for every time period for which there is a cash flow.C. uses the current risk-free nominal rate to discount all of the cash flows related to a project.D. stresses the use of the real rate of return to compute the net present value (NPV) of a project.E. converts a foreign denominated NPV into a dollar denominated NPV.35. The foreign currency approach to capital budgeting analysis:I. is computationally easier to use than the home currency approach.II. produces the same results as the home currency approach.III. utilizes the uncovered interest parity relationship.IV. computes the net present value of a project in both the foreign and in the domestic currency. 31-9
Chapter 31 - International Corporate Finance36. An international firm which imports raw materials can reduce its _____ exposure to _____ rate risk by entering into a forward contract. 37. The changes in the relative economic conditions between countries are referred to as the: 38. Which of the following statements are correct?I. The usage of forward rates can help reduce the short-run exposure to exchange rate risk.II. Accounting translation gains are recorded on the income statement as other income.III. The long-run exchange rate risk faced by an international firm can be reduced if the firm borrows money in the foreign country where it has operations.IV. Unexpected changes in economic conditions are classified as short-run exposure to exchange rate risk. A. I and III onlyB. II and IV onlyC. II and III onlyD. I and IV onlyE. I and II only39. The most important complication of international finance is the: 31-10
Chapter 31 - International Corporate Finance

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