B Answer the following multimple choice question No explanation is needed. Only choose the correct answer. 1 mark each. Total Mark 3

1. A foreign project generates a negative cash flow in year 1 and positive cash flows in years 2 through 5. The NPV for this project will be higher if the foreign currency _________ in year 1 and _________ in years 2 though 5.

1 point

1. appreciates;appreciates
2. depreciates;appreciates
3. depreciates;depreciates
4. appreciates;depreciates

2. When a countrys inflation rate rises relative to that of another country, decreased ______ and increased _______depress the _______ countrys currency.

1 point

1. expense; revenue; low-inflation
2. exports; imports; high-inflation
3. exports; imports; low-inflation
4. imports; exports; high-inflation

3. In general, increased investment by the parent in the foreign subsidiary causes more exchange rate exposure to the parent over time because the cash flows remitted to the parent will be larger.

1 point

1. True
2. False