________ is an acceptable method of adjusting for risk when analyzing the prospects of a foreign investment.

Question

Quizplus · Accepted Answer

All of the listed methods - adjusting the discount rate, adjusting the cash flows, and conducting sensitivity and scenario analysis - are acceptable ways of adjusting for risk when analyzing foreign investments. Adjusting the discount rate is particularly useful in accounting for differences in risk across investments, while adjusting cash flows can help account for potential disruptions in cash flows due to economic, political, or other issues. Sensitivity and scenario analysis involve examining how changes in various factors (e.g. exchange rates, interest rates, political stability) can impact the investment's performance, and can be useful in determining the likelihood of success under different circumstances.

________ Is an Acceptable Method of Adjusting for Risk When