Quiz Ch 27 – T/F Definition of Political Risk
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
True or false: Political risk is the concern that a hostile government may confiscate a company’s assets.
True or false: Political risk is the concern that a hostile government may confiscate a company’s assets.
True or false: It is not mandatory to forecast exchange rates for the project’s entire duration in projecting cash flows and NPV for a foreign project.
True or false: The forward exchange market involves the trading of currencies with a commitment to future delivery.
True or false: The implied exchange rate is ¥117.19/$US if a Big Mac costs $2.56 in the United States and ¥300 in Japan.
True or false: High-interest countries generally experience elevated inflation rates.
True or false: The design of project financing often aims to lessen the motivation of a foreign government to expropriate capital investments.
True or false: Purchasing power parity is a more effective predictor of long-term price changes compared to short-term indicators.
True or false: A forward discount on the peso relative to the U.S. dollar implies that the U.S. dollar is likewise experiencing a discount about the peso.
True or false: The Big Mac exchange rate mirrors the official exchange rate quotes provided for various currencies.
True or false: Interchangeable terms for the same foreign exchange risk are transaction exposure and economic exposure.