6. Answer the following multiple choice question. (Choose the correct answer only ). 1 mark each question.

1. An international project's NPV is _________ related to the size of the initial investment and _________ related to the project's required rate of return.

1 point

1. positively;positively
2. positively;negatively
3. negatively;negatively
4. negatively;positively

2. To hedge _____, a forward contract can be obtained to _____the foreign currency forward. Alternatively, a _____option contract can be used.

1 point

1. receivables; buy; put
2. receivables; sell; call
3. receivables; sell; put
4. payables; buy; put

3. The cost of capital is the ____ rate of return an investment project must generate in order to pay its ____ costs.

1 point

1. maximum;operating
2. minimum;financing
3. maximum;financing
4. minimum;operating

4. Translation exposure reflects:

1 point

1. the exposure of a firm's cash flows to exchange rate fluctuations
2. the exposure of a firm's ongoing international transactions to exchange rate fluctuations
3. the exposure of a firm's consolidated financial statements to exchange rate fluctuations
4. the exposure of a firm's local currency value to transactions between foreign exchange traders