When assessing the additional risk that can occur from investing abroad, firms may choose to account for risk via:
A) adjusting the cash flows.
B) adjusting the discount rates.
C) adjusting both cash flows and discount rates.
D) adjusting all of the above.

Question

Quizplus · Accepted Answer

Adjusting for risk when investing abroad can involve modifying the cash flows to reflect potential risks such as currency fluctuations or political instability, altering the discount rates to account for the additional risk of investing in a foreign market, or a combination of both. Therefore, all of the options provided are valid methods for accounting for additional risk.

When Assessing the Additional Risk That Can Occur from Investing