When a firm perceives that a foreign currency is ____, the firm may attempt direct foreign investment in that country, as the initial outlay should be relatively ____.
A) overvalued; high
B) overvalued; low
C) undervalued; high
D) undervalued; low

Question

​When a firm perceives that a foreign currency is ____, the firm may attempt direct foreign investment in that country, as the initial outlay should be relatively ____.
A) ​overvalued; high
B) ​overvalued; low
C) ​undervalued; high
D) ​undervalued; low

Quizplus · Accepted Answer

When a foreign currency is undervalued, the firm may attempt direct foreign investment in that country, as the initial outlay should be relatively low. This is because when a foreign currency is undervalued, the cost of investment is lower due to the cheaper currency, making it a more attractive option for firms to invest in.

​When a Firm Perceives That a Foreign Currency Is ____

When a Firm Perceives That a Foreign Currency Is ____