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- Suppose interest rates in the economy increase. How would such a change affect the costs of both debt and common equity based on the CAPM?What risk is due to changes in the level of interest rate in the economy and may affect industries at the same time? a.systematic risk b. inflation rate risk c.foreign exchange rate risk d.interest rate riskHow does a company determine the interest rate it uses in making a netpresent value (NPV) decision?
- Why are they important for policymakers and investors, also in what situations and why do they use them? Gross Domestic Product (GDP): Balance of Payments (BoP): Inflation: Real return & Nominal Return:Which of the following factor is NOT related to increasing an MNC's cost of capital? A. Risk-free interest rate B. Exchange rate C. Size of the MNC D. Country riskHow has financial market integration affected interest rate movements?