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LOS c: Discuss the arrangements for adjusting cash flows, rather than adjusting the discount rate, to account for emerging market risks (e.g., inflation, macroeconomic volatility, capital control, and political risk) in a scenario analysis.
Q1. Which of the following is NOT an argument for adjusting cash flows to account for emerging market risks rather than adjusting the discount rate?
A) Country risk is not diversifiable.
B) Many factors directly affect cash flows.
C) Country risk is a one-sided risk.
Q2. The best way to incorporate country risk into emerging market company valuations is by adjusting the:
A) risk-free rate.
B) cash flows.
C) discount rate. | 
发表于 2009-3-6 14:56
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