A)Finance rests on the assumption that the objective of firms is to maximize their "economic profit". Discuss this statement, and explain the differences between national and international firms in terms of this concept.

B)Explain the rationale / logic behind the concepts of "International Fisher Effect" and "Purchasing Power Parity". In addition, explain how one can test their empirical validity. In addition, if the result do not reflect their logic, why?

C)Explain the rationale / logic of the Capital Asset Pricing Model (CAPM). In addition, discuss how one can use in the estimation of the cost of equity capital. Finally, highlight some differences between the cost of equity capital of national and multinational firms.

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A Maximizing Economic Profit for Firms Discussion Economic profit is the difference between total revenue and total explicit and implicit costs It represents the true profit earned by a firm after con... View the full answer