If a firm is located in a country with a relatively unstable political environment, management will require a lower rate of return on capital projects.

Question

Quizplus · Accepted Answer

An unstable political environment typically increases the risk and uncertainty of investing in a particular country. As a result, investors and managers will require a higher rate of return to compensate for this additional risk. Therefore, the statement in the question is false.

If a Firm Is Located in a Country with a Relatively