When a foreign currency is perceived by a firm to be undervalued, the firm may consider direct foreign investment in that country, as the initial outlay should be relatively low.

Question

Quizplus · Accepted Answer

When a foreign currency is undervalued, the firm will have to pay less in their local currency to acquire assets or resources in the foreign country. Therefore, the initial outlay for direct foreign investment should be relatively low.

When a Foreign Currency Is Perceived by a Firm to Be