When faced with additional risk from a foreign investment,firms typically account for the additional risk by adjusting the discount rates or by adjusting cash flows.

Question

Quizplus · Accepted Answer

When firms face additional risk from foreign investment, they typically adjust the discount rates or cash flows to account for the risk. This is because higher risk usually requires higher returns to compensate for the uncertainty of future cash flows, and the specific adjustments will depend on the nature of the risk and the investment.

When Faced with Additional Risk from a Foreign Investment,firms Typically