Which of the following factors is not expected to generally have a favorable impact on the firm's cost of capital? Group of answer choices easy access to international capital markets. high degree of international diversification. high exposure to exchange rate fluctuations. all of these

Q: Question: 1 . Which of the following is not correct?   Choices: Premium arises when the spot…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which one of the following will have little if any, effect on a well-diversified portfolio?…

A: Introduction: Diversification is nothing but the strategy that reduces the risk by allocating assets…

Q: Vhich of the following is NOT a proactive financial strategy related to the OLI paradigm in…

A: OLI stands for Ownership advantages, location advantages and internationalisation advantages.

Q: The mobility of international capital flows is causing emerging market nations to choose between a…

A: Mobility of, Capital is a common phenomenon post-globalization of world Economy  The exchange rate…

Q: how would market forces be affected? Does arbitrage opportunity destabilize foreign exchange…

A: Arbitrage is nothing but buying in one market with some price and selling the same with other market…

Q: If the firm ,NAB economists,had exposures in currencies such as Brazilian Real or Indonesian Rupiah,…

A: Hedging is the act of protecting oneself against any occurrence of event of loss in future. It is…

Q: Does Arbitrage destabilize foreign exchange markets? Support your logic about that statement

A: Solution- F = S*1+if/1+id  F= Forward Exchange Rate  S= Current Spot Exchange Rate  Id= Interest…

Q: international diversification is more likely to achieve significant risk reduction if one: A…

A: International diversification helps reduce the concentration risk of investing in one region or in…

Q: What are the three types of risk that a global company is exposed to as a consequence of currency…

A: Three types of risk: Transaction exposure Translation exposure Economic exposure   Transaction…

Q: In general, an MNC's size, its access to international capital markets, and international…

A: The answer and the explanation is provided below:

Q: a)  Why is financial leverage understood to be a fair-weather friend?

A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…

Q: Once capital markets are integrated, it is difficult for a country to maintain a fixed exchange…

A: Capital markets are places where money is exchanged between people who supply capital and those who…

Q: international

A: Benefits of international portfolio diversification : . Risk Can Be Reduced: Having an international…

Q: Transaction exposure:       A. measures the extent to which foreign exchange volatility may affect a…

A: Transaction exposure refers to the exposure level of loss happened from the risk involved in the…

Q: One of the arguments for the irrelevance of exchange rate exposure management is that: O a.…

A: As per irrelevance of exchange rate exposure management is that investors in Multinational…

Q: nternational Investments U.S.-based MNCs commonly invest in foreign securities. Assume that the…

A: If the investors are expecting , dollar would be stronger in the future, it will discourage then to…

Q: whether capital generated in the industrialized countries is finding its way to and from emerging…

A: An economy is a large set of interrelated production, consumption, and exchange activities that help…

Q: ain why would a firm consider investing in a portfolio of foreign currencies instead of just a…

A: Firms always invest in different currencies while doing the business at international levels but…

Q: How may the domestic cost of capital for a foreign venture be adjusted to account for currency rate…

A: Country risk refers to a country's economic, political, and corporate hazards, all of which may…

Q: Multinational Finance and investment Q2 c) Illustrate how to synthesize a forward hedging strategy…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: QUESTION 15 The existence of inefficiencies in capital markets due to lack of disclosure and other…

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Q: Made sure you differentiate portfolio investments from FDI. Can we argue that a "A closed economy,…

A: FDI and  Portfolio investment - FDI or Foreign Direct Investment  involves a large commitment of…

Q: Investing imbalance in global markets is a process of international diversification with the asset…

A: International diversification is a process of investing in certain asset classes globally such that…

Q: From a practical standpoint, how do international markets differ from domestic markets? What role do…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Which of the following is/are TRUE with respect to spot market liquidity? I. The market liquidity…

A: We know that Spot market is used for immediate liquity which is normally happens on T+2 Days. It is…

Q: Which of the following factor is NOT related to increasing an MNC's cost of capital? A. Risk-free…

A: Cost of capital means the rate of return a company is getting its borrowings at. Cost of capital is…

Q: If the firm had exposures in currencies such as Brazilian Real or Indonesian Rupiah,what options…

A: Hedging acts as an insurance facility of the asset or security held as investment to reduce the…

Q: A U.S. firm will be ________ by dollar _______ if its expenses are more susceptible to exchange rate…

A: There are instances when a company based in USA has expenses that are more susceptible to exchange…

Q: Identify an economic crisis or turning point that had significant impacts to certain industries in…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.