Question

In: Accounting

which of the following is an important type of risk in an international capital budgeting context?...

which of the following is an important type of risk in an international capital budgeting context?


A political risk

b default risk

c business cycle risk

d appropriation risk

Solutions

Expert Solution

Ans : Political risk

Explanation:one of the important type of risk in international capital budgeting is political risk which will be playing a key role in decision making.

Remaining risks does not thrown any major difficulties in decision making


Related Solutions

7. International capital budgeting One of the important components of multinational capital budgeting is to analyze...
7. International capital budgeting One of the important components of multinational capital budgeting is to analyze the cash flows generated from subsidiary companies. Consider this case: Sacramone Products Co. is a U.S.-based firm evaluating a project in Mexico. You have the following information about the project: • The project requires a 130,000 peso investment today and is expected to generate cash flows of 61,500 pesos at the end of the next three years. • The current U.S. exchange rate with...
Capital Budgeting and Risk Analysis Define the most important capital budgeting techniques. name at least two...
Capital Budgeting and Risk Analysis Define the most important capital budgeting techniques. name at least two (2) capital budgeting techniques (e.g., NPV, IRR, Payback Period, etc.) that you used to arrive investment decision.
Choose ONE: Capital budgeting typically requires some type of sensitivity analysis. In the case of international...
Choose ONE: Capital budgeting typically requires some type of sensitivity analysis. In the case of international capital budgeting from the project perspective, analysts consider political risk, foreign exchange risk and foreign exchange risk. Identify and discuss the important aspects of these two types of risk considerations. What is real option analysis? How does it differ from the discounted cash flow approach to project evaluation? Why do some decision-makers prefer the real option approach over the DCF approach? Make sure you...
Which measures are important when analyzing capital budgeting decisions? Why?
Which measures are important when analyzing capital budgeting decisions? Why?
Which of the following statements is CORRECT? A) Capital budgeting is the process by which a...
Which of the following statements is CORRECT? A) Capital budgeting is the process by which a firm selects the different amounts and types of capital it should finance its investments with. B) Capital budgeting is generally a short-term decision. C) Capital budgeting is the process by which a firm analyzes alternate projects and chooses the project(s) it wants to invest in. D) Capital budgeting has little to no impact on a firm’s future strategic direction.
Chapter 13 introduces risk as a capital budgeting factor. As we build on capital budgeting from...
Chapter 13 introduces risk as a capital budgeting factor. As we build on capital budgeting from chapter 12, why is it absolutely necessary to introduce and use risk in our project/investment analysis? Why not just use the weighted average cost of capital as we did in chapter 12? Last, how does the introduction of risk potentially change our decision about a project/investment?
1) Which one of the following is a capital budgeting decision?
 1) Which one of the following is a capital budgeting decision? A) Deciding whether or not a new production facility should be built B) Determining how much inventory to keep on hand C) Deciding when to repay a long-term debt D) Deciding how much credit to grant to a particular customer E) Determining how much debt should be borrowed from a particular lender 2) A firm's capital structure refers to the firm's: A) combination of accounts appearing on the left side of its balance sheet. B) proportions of...
Why is Capital Budgeting Important in Corporations? Explain.
Why is Capital Budgeting Important in Corporations? Explain.
How would a very risky investment/project be handled in the capital budgeting/cost of capital context?
How would a very risky investment/project be handled in the capital budgeting/cost of capital context?
Foreign Exchange Risk and Capital Budgeting. How is foreign exchange risk sensitivity factored into the capital...
Foreign Exchange Risk and Capital Budgeting. How is foreign exchange risk sensitivity factored into the capital budgeting analysis of a foreign? project? Please answer this question IN YOUR OWN WORDS.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT