Business Finance
Chapter Exam Questions
Course Introduction
Business Finance explores the fundamental principles of financial management within a corporate setting. This course covers key topics such as financial statement analysis, time value of money, risk and return, capital budgeting, cost of capital, and corporate financing decisions. Students will learn how organizations raise capital, invest resources efficiently, and manage both short-term and long-term financial planning. Emphasis is placed on applying quantitative techniques and analytical tools to make informed financial decisions that align with business objectives.
Recommended Textbook
Corporate Finance 3rd Canadian Edition by Jonathan Berk
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2
Chapter 1: The Corporation
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Q1) Which of the following statements is correct?
A) The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in the world.
B) The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in North America.
C) The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in Canada.
D) The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in Toronto.
Answer: A
Q2) A sole proprietorship is owned by
A) one person.
B) two or more people.
C) shareholders.
D) bankers.
Answer: A
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Chapter 2: Introduction to Financial Statement Analysis
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Q1) If on December 31,2005 Luther has 8 million shares outstanding trading at $15 per share,then what is Luther's enterprise value?
Answer: Enterprise value = Market value of equity + Debt - Cash market value of equity = 8 million × $15 = $120 million
Debt = notes payable + current maturities of long-term debt + long-term debt
Debt = 9.6 + 36.9 + 168.9 = 215.4
Cash = 58.5
So,enterprise value = $120 + 215.4 - 58.5 = $276.90
Q2) If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then what is Luther's Enterprise Value?
A) -$63.3 million
B) $353.1 million
C) $389.7 million
D) $516.9 million
Answer: C
Q3) If on December 31,2005 Luther has 8 million shares outstanding trading at $15 per share,then what is Luther's market-to-book ratio?
Answer: market-to-book = market value of equity / book value of equity market-to-book = 8 million × $15 / $63.6 = 1.89
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Page 4
Chapter 3: Arbitrage and Financial Decision Making
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Q1) Which of the following statements is correct?
A) Regardless of our preferences for cash today versus cash in the future, we should always maximize benefits first. We can then borrow or lend to shift cash flows through time and find our most preferred pattern of cash flows.
B) Regardless of our preferences for cash today versus cash in the future, we should always maximize present value first. We can then borrow or lend to shift cash flows through time and find our most preferred pattern of cash flows.
C) Regardless of our preferences for cash today versus cash in the future, we should always maximize net present value first. We can then borrow or lend to shift cash flows through time and find our most preferred pattern of cash flows.
D) Regardless of our preferences for cash today versus cash in the future, we should always minimize the cost first. We can then borrow or lend to shift cash flows through time and find our most preferred pattern of cash flows.
Answer: C
Q2) The price per share of the ETF in a normal market is:
Answer: Value of ETF = 2 × 79.50 + 3 × 40.00 + 3 × 48.50 = $424.50
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Chapter 4: The Time Value of Money
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Q1) If the current rate of interest is 8%,then the present value of an investment that pays $1,000 per year and lasts 20 years is closest to:
A) $18,519
B) $45,761
C) $9,818
D) $20,000
Q2) Assume that university costs continue to increase an average of 4% per year and that all their child's university savings are invested in an account paying 7% interest.Draw a timeline that details the amount of money their child will need to have in the future for each of the four years of their child's undergraduate education (assuming that their child begins university at age 18).
Q3) You have been offered the following investment opportunity: if you pay $2,500 today,you will receive $1,000 at the end of each of the next three years.Draw a timeline detailing this investment opportunity.
Q4) Draw a timeline detailing the cash flows from investment "B."
Q5) Draw a timeline detailing the cash flows from investment "A."
Q6) Draw a timeline detailing Joe's cash flows from the sale of the family business.
Q7) The future value at retirement (age 65)of your savings is:
Page 6
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Chapter 5: Interest Rates
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Q1) The present value of the lease payments for the delivery truck is closest to:
A) $206,900
B) $207,050
C) $207,680
D) $198,420
Q2) Most provinces in Canada have harmonized their cost of credit disclosure requirements so that when the compounding interval for the APR is not stated explicitly,it is equal ________.
A) to the interval between the payments
B) to the number of payment intervals in a year
C) to the effective rate
D) to the nominal rate
Q3) If you forgo the $2,500 rebate and finance your new car through the dealership your monthly payments (with payments made at the end of the month)will be closest to:
A) $593
B) $652
C) $595
D) $541
Q4) Should you purchase the delivery truck or lease it? Why?
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Chapter 6: Valuing Bonds
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Q1) Which of the following statements is false?
A) Forward rates tend not to be good predictors of future spot rates.
B) Given the risk associated with interest rate changes, corporate managers require tools to help manage this risk.
C) One of the most important tools to manage the risk of interest rate changes is the interest rate forward contract.
D) A spot rate is an interest rate that we can guarantee today for a loan or investment that will occur in the future.
Q2) Which of the following statements is false?
A) The bond certificate typically specifies that the coupons will be paid periodically until the maturity date of the bond.
B) The bond certificate indicates the amounts and dates of all payments to be made.
C) The only cash payments the investor will receive from a zero coupon bond are the interest payments that are paid up until the maturity date.
D) Usually the face value of a bond is repaid at maturity.
Q3) Assuming that this bond trades for $1,035.44,then the YTM for this bond is equal to:
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Chapter 7: Valuing Stocks
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Q1) In general,one of the reasons that the constant dividend growth model should not be used for young firms is
A) because young firms have no profits.
B) because young firms have zero growth.
C) because young firms' growth rates are unstable.
D) because young firms grow too fast.
Q2) If you want to value a firm that consistently pays out its earnings as dividends,the simplest model for you to use is the
A) enterprise value model.
B) total payout model.
C) dividend discount model.
D) discounted free cash flow model.
Q3) The trailing price-earning ratio is based on
A) the earnings over the previous 12 months and current share price.
B) the estimated earnings over the next 12 months and current share price.
C) the earnings over the previous 12 months and the average share price of the past 12 months.
D) the estimated earnings over the next 12 months and the average share price of the past 12 months.
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Page 9
Chapter 8: Investment Decision Rules
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Q1) Which of the following statements is false?
A) The incremental IRR investment rule applies the IRR rule to the difference between the cash flows of the two mutually exclusive alternatives.
B) When a manager must choose among mutually exclusive investments, the NPV rule provides a straightforward answer.
C) The likelihood of multiple IRRs is greater with the regular IRR rule than with the incremental IRR rule.
D) Problems can arise using the IRR method when the mutually exclusive investments have differences in scale.
Q2) The NPV of project A is closest to:
A) 12.0
B) 12.6
C) 15.0
D) 42.9
Q3) The NPV of project B is closest to:
A) 12.6
B) 23.3
C) 12.0
D) 15.0
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Page 10
Chapter 9: Fundamentals of Capital Budgeting
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Q1) Which of the following statements is false?
A) A capital budget lists the projects and investments that a company plans to undertake during the coming year.
B) Income Tax = EBIT × (1 - <sub>c</sub>).
C) When sales of a new product displace sales of an existing product, the situation is often referred to as cannibalization.
D) Overhead expenses are often allocated to the different business activities for accounting purposes.
Q2) Since the CCA deducted each year is a proportion of the undepreciated capital cost (UCC),UCC will gradually become ________.
A) zero
B) a small negative number
C) a small positive number
D) none of the above
Q3) ________ considers the effect of changing multiple parameters simultaneously.
A) Break-even analysis
B) Scenario analysis
C) Sensitivity analysis
D) Cost benefit analysis
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11
Chapter 10: Capital Markets and the Pricing of Risk
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Q1) The standard deviation for the return on an portfolio of 20 type S firms is closest to:
A) 5.10%
B) 23.0%
C) 15.0%
D) 5.25%
Q2) What is the difference between common risk and independent risk?
Q3) Assume that you purchased Ford Motor Company stock at the closing price on December 31,2004 and sold it after the dividend had been paid at the closing price on January 26,2005.Your dividend yield for this period is closest to:
A) -8.15%
B) 0.75%
C) 0.70%
D) -8.80%
Q4) Which of the following is NOT a diversifiable risk?
A) The risk that oil prices rise, increasing production costs
B) The risk of a product liability lawsuit
C) The risk that the CEO is killed in a plane crash
D) The risk of a key employee being hired away by a competitor
Q5) Which pharmaceutical company faces less risk?
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Chapter 11: Optimal Portfolio Choice and the Capital Asset
Pricing Model
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Q1) Calculate the variance on a portfolio that is made up of equal investments in Home Depot and IBM stock.
Q2) You want to maximize your expected return without increasing your risk.Without increasing your volatility beyond its current 10%,the maximum expected return you could earn is closest to:
A) 12.0%
B) 12.5%
C) 13.4%
D) 15.0%
Q3) The variance on a portfolio that is made up of equal investments in Duke Energy and Microsoft stock is closest to:
A) 0.065
B) 0.090
C) 0.149
D) -0.020
Q4) What is the variance on a portfolio that has $2,000 invested in Duke Energy,$3,000 invested in Microsoft,and $5,000 invested in Wal-Mart stock?
Q5) Calculate the correlation between Home Depot's and IBM's returns.
Q6) What are three main assumptions underlie the CAPM?
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Chapter 12: Estimating the Cost of Capital
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Q1) California Gold Mining's required return is closest to:
A) -5%
B) 13%
C) 15%
D) 5%
Q2) Assuming that Tom wants to maintain the current volatility of his portfolio,then the amount that Tom should invest in the market portfolio to maximize his expected return is closest to:
A) 72%
B) 92%
C) 110%
D) 140%
Q3) The Canadian S&P/TSX Composite Index is a ________ stock index.
A) price weighted
B) return weighted
C) risk weighted
D) value weighted
Q4) Why does the yield to maturity of a firm's debt generally overestimate its debt cost of capital?
Q5) Describe two methods that can be used to estimate a firm's debt cost of capital.
Page 14
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Chapter 13: Investor Behaviour and Capital Market
Efficiency
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Q1) Which of the following statements is false?
A) The existence of the momentum trading strategy has been widely known for at least ten years.
B) The information required to implement a momentum strategy is not readily available to investors.
C) If the market portfolio is not efficient, then a stock's beta with the market is not an adequate measure of its systematic risk.
D) If the market portfolio is not efficient, then the so-called profits from a positive alpha trading strategy are really returns for bearing risk that investors are averse to and the CAPM doesn't capture.
Q2) Explain why the market portfolio proxy may not be efficient.
Q3) Stocks with lower market capitalizations have ________ average returns.This empirical result is called the size effect.
A) higher
B) lower
C) zero
D) weighted
Q4) What does the existence of a positive alpha investment strategy imply?
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Chapter 14: Financial Options
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Q1) Which of the following statements is false?
A) If the value of the firm's assets exceeds the required debt payment, debt holders are fully repaid.
B) Another way to view corporate debt is as a portfolio of riskless debt and a short position in a call option on the firm's assets with a strike price equal to the required debt payment.
C) Viewing debt as an option portfolio is useful as it provides insight into how credit spreads for risky debt are determined.
D) You can think of the debt holders as owning the firm and having sold a call option with a strike price equal to the required debt payment.
Q2) Using options to reduce risk is called A) speculation.
B) a naked position.
C) hedging.
D) a covered position.
Q3) You have decided to buy 10 January 2009 call options on Merck with an exercise price of $45 per share.How much will this transaction cost you and are these contracts in- or out-of-the-money?
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Page 16
Chapter 15: Option Valuation
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Q1) Assuming the beta on KD stock is 1.1,the calculated beta for a one-year call option on KD stock with a strike price of $20 is closest to:
A) -1.8
B) 2.4
C) -7.7
D) 4.6
Q2) Using the binomial pricing model,calculate the price of a two-year call option on Kinston stock with a strike price of $9.
Q3) Which of the following statements is false?
A) For companies with high debt-to-equity ratios, the approximation that the beta of debt is zero is unrealistic; such corporations have a positive probability of bankruptcy, and this uncertainty usually has systematic components.
B) When the debt is risky, the firm's equity is always in-the-money; thus = 1.
C) If we let A be the value of the firm's assets, E be the value of equity, and D be the value of debt, then because equity is a call option on the assets of the firm, E = S + B with A = E + D = S.
D) Equity can be viewed as a call option on the firm's assets.
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Chapter 16: Real Options
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Q1) An abandonment option is the option to walk away.Abandonment options can ________ a project because a firm can drop a project if it turns out to be unsuccessful. A) add value to B) subtract value from C) keep the value of D) none of the above
Q2) Assume that Kinston has the ability to ignore the pilot production and test marketing and to go ahead and build their manufacturing plant immediately.Further assume that the probability of high or low demand is still 50%.Draw a decision tree that details Kinston Industries Mountain Bike Project if Kinston goes ahead and builds the plant immediately.
Q3) Value can be created by ________ to resolve.
A) waiting for certainty
B) waiting for uncertainty
C) act on certainty
D) act on uncertainty
Q4) Assuming you are able to sell the plant,draw a decision tree detailing this problem.
Q5) Describe the two factors that affect the value of an investment timing option?
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Page 18
Chapter 17: Capital Structure in a Perfect Market
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Q1) With perfect capital markets,what is the market value of Luther's equity after the share repurchase?
A) $15 billion
B) $10 billion
C) $25 billion
D) $20 billion
Q2) Assume that MM's perfect capital markets conditions are met and that you can borrow and lend at the same 5% rate as With.You have $5,000 of your own money to invest and you plan on buying Without stock.Using homemade leverage,how much do you need to borrow in your margin account so that the payoff of your margined purchase of Without stock will be the same as a $5,000 investment in With stock?
A) $10,000
B) $5,000
C) $2,500
D) $0
Q3) Suppose that to raise the funds for the initial investment the firm borrows $45,000 at the risk free rate and issues new equity to cover the remainder.In this situation,calculate the value of the firm's levered equity from the project.What is the cost of capital for the firm's levered equity?
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Page 19
Chapter 18: Debt and Taxes
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Q1) If Flagstaff currently maintains a debt to equity ratio of 1,then Flagstaff's after-tax WACC is closest to:
A) 10.25%
B) 10.00%
C) 9.50%
D) 8.75%
Q2) Assuming that the risk of the tax shield is only 6% even though the loan pays 8%,then the present value of LCMS' interest tax shield is closest to:
A) $24.5 million
B) $18.0 million
C) $33.0 million
D) $20.0 million
Q3) The amount of Rosewood's interest tax shield is closest to:
A) $115 million
B) $290 million
C) $175 million
D) $60 million
Q4) If Flagstaff currently maintains a .8 debt to equity ratio,then calculate the value of Flagstaff's interest tax shield.
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Chapter 19: Financial Distress, managerial Incentives, and Information
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Q1) There are two relevant acts for financially distressed firms in Canada:
A) the Bankruptcy and Insolvency Act (BIA) and the Companies' Registration Act (CRA).
B) the Bankruptcy and Insolvency Act (BIA) and the Companies' Creditors Arrangement Act (CCAA).
C) the Canada Business Corporations Act (CBCA) and the Companies' Creditors Arrangement Act (CCAA).
D) the Canada Business Corporations Act (CBCA) and the Canada's Corporations Act (CCA).
Q2) Suppose that BBB pays corporate taxes of 35% and that shareholders expect the change in debt to be permanent.Assume that capital markets are perfect except for the existence of corporate taxes and financial distress costs.If the price of BBB's stock rises to $10.85 per share following the announcement,then the present value of BBB's financial distress costs is closest to:
A) $21.25 million
B) $35.00 million
C) $11.40 million
D) $13.75 million
Q3) List five general categories of indirect costs associated with bankruptcy.
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Chapter 20: Payout Policy
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Q1) Assume that Omicron uses the entire $50 million to repurchase shares.The number of shares that Omicron will repurchase is closest to:
A) 1.0 million
B) 1.2 million
C) 1.1 million
D) 0.9 million
Q2) The effective tax disadvantage for retaining cash in 2002 is closest to:
A) 15.00%
B) 14.75%
C) 30.00%
D) 35.00%
Q3) Assume that Rockwood is not able to repurchase shares prior to the market becoming aware of the new information regarding Rockwood's true value.If Rockwood repurchases the shares following the release of the new information,then the number of shares outstanding following the repurchase is closest to:
A) 92 million
B) 90 million
C) 75 million
D) 10 million
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Page 22
Chapter 21: Capital Budgeting and Valuation With Leverage
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Q1) The unlevered value of Omicron's new project is closest to:
A) $96
B) $124
C) $126
D) $25
Q2) Which of the following statements is false?
A) When we relax the assumption of a constant debt-equity ratio, the FTE method is relatively straightforward to use and is therefore the preferred method with alternative leverage policies.
B) When debt levels are set according to a fixed schedule, we can discount the predetermined interest tax shields using the debt cost of capital, r<sub>D</sub>.
C) With a constant interest coverage policy, the value of the interest tax shield is proportional to the project's unlevered value.
D) When the firm keeps its interest payments to a target fraction of its FCF, we say it has a constant interest coverage ratio.
Q3) Given that Rose issues new debt of $50 million initially to fund the acquisition,the total value of this acquisition using the APV method is equal to:
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Chapter 22: Valuation and Financial Modelling: a Case Study
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Q1) What is the purpose of the sensitivity analysis?
Q2) With the proper changes it is believed that Ideko's credit policies will allow for an account receivables days of 60.The forecasted accounts receivable for Ideko in 2008 is closest to:
A) $14,525
B) $19,690
C) $22,710
D) $16,970
Q3) Based upon the average EV/Sales ratio of the comparable firms,Ideko's target economic value is closest to:
A) $191 million
B) $155 million
C) $165 million
D) $157 million
E) $193 million
Q4) What range for the market value of equity for Ideko is implied by the range of P/E multiples for the comparable firms?
Q5) Describe the major approach in estimating the cost of capital when attempting to evaluate an acquisition of a private firm.
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Chapter 23: The Mechanics of Raising Equity Capital
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Q1) Which of the following statements is false?
A) More often than not, firms return to the equity markets and offer new shares for sale, a type of offering called a seasoned equity offering (SEO).
B) Usually, profitable growth opportunities occur throughout the life of the firm, and in some cases it is not feasible to finance these opportunities out of retained earnings.
C) When a firm issues stock using an SEO, it follows many of the same steps as for an IPO. The main difference is that a market price for the stock already exists, so the price-setting process is not necessary.
D) A firm's need for outside capital usually ends at the IPO.
Q2) Which of the following statements is false?
A) Primary shares are new shares issued by the company.
B) Today, investors become informed about the impending sale of stock by the news media, via a road show, or through the book-building process, so tombstones are purely ceremonial.
C) In a cash offer, the firm offers the new shares to existing shareholders.
D) Historically, intermediaries would advertise the sale of stock (both IPOs and SEOs) by taking out advertisements in newspapers called tombstones.
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25
Chapter 24: Debt Financing
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Q1) Which of the following statements is false?
A) Before the call date, investors anticipate the optimal strategy that the issuer will follow, and the bond price reflects this strategy.
B) The yield to maturity of a callable bond is calculated as if the bond were called at the earliest opportunity.
C) A callable bond will trade at a lower price (and therefore a higher yield) than an otherwise equivalent non-callable bond.
D) The price of a callable bond can be low when yields are high, but does not rise above the call value when the yield is low.
Q2) In Canada,the face value of most corporate bonds is denominated in standard increments,most often ________ and almost always pay coupons ________.
A) $100,000; quarterly
B) $10,000; annually
C) $1,000; monthly
D) $1,000; semiannually
Q3) What is the Yield to Call (YTC)on this bond?
Q4) What is the Yield to Call (YTC)on this bond?
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26
Chapter 25: Leasing
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Q1) In a perfect market,where lessors compete with one another in initiating leases,the cost of leasing is equivalent to
A) the cost of purchasing and future reselling price of the asset.
B) the future cost of purchasing and reselling the asset.
C) the cost of purchasing and reselling the asset.
D) the future cost of purchasing and future reselling price of the asset.
Q2) Special-purpose entity (SPE)is diminishing in Canada as accounting moves to ________.
A) International Financial Reporting Standards
B) Generally Accepted Accounting Principles
C) standards of the Canadian Institute of Chartered Accountants
D) capital cost allowance
Q3) Under CICA,________ is viewed as a rental for accounting purposes.In this case,the lessee reports the entire lease payment as an operating expense.
A) a capital lease
B) an operating lease
C) a short-term lease
D) a temporary lease
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Chapter 26: Working Capital Management
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Q1) Your firm purchases goods from its supplier on terms of 2/10,net 40.The effective annual cost to your firm if it chooses not to take advantage of the trade discount offered and stretches the accounts payable to 60 days is closest to:
A) 20.1%
B) 15.9%
C) 13.0%
D) 11.1%
Q2) Luther's cash conversion cycle is closest to:
A) 51 days
B) 66 days
C) 71 days
D) 129 days
Q3) Your firm purchases goods from its supplier on terms of 1/10,net 30.The effective annual cost to your firm if it chooses not to take advantage of the trade discount offered is closest to:
A) 16.8%
B) 44.6%
C) 20.1%
D) 13.0%
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Chapter 27: Short-Term Financial Planning
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Q1) Which of the following statements is false?
A) By relying on short-term debt the firm exposes itself to funding risk, which is the risk of incurring financial distress costs should the firm not be able to refinance its debt in a timely manner or at a reasonable rate.
B) An ultra-conservative policy would involve financing even some of the plant, property, and equipment with short-term sources of funds.
C) With a conservative financing policy, the firm would use short-term debt very sparingly to meet its peak seasonal needs.
D) Short-term debt can have lower agency and lemons costs than long-term debt, and an aggressive financing policy can benefit shareholders.
Q2) Positive cash flow shocks ________ demand for short-term financing while negative cash flow shocks ________ short-term financing needs.
A) do not create; can create B) create; create
C) do not create; cannot create D) create; cannot create
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Chapter 28: Mergers and Acquisitions
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Q1) Which of the following statements is false?
A) Any acquirer shares received in full or partial exchange for target shares triggers an immediate tax liability for target shareholders.
B) In a friendly takeover, the target board of directors supports the merger, negotiates with potential acquirers, and agrees on a price that is ultimately put to a shareholder vote.
C) How the acquirer pays for the target affects the taxes of both the target shareholders and the combined firm.
D) If the acquirer purchases the target assets directly (rather than the target stock), then it can step up the book value of the target's assets to the purchase price.
Q2) When a hostile takeover appears to be inevitable,a target company will sometimes look for another,friendlier company to acquire it called a A) poison pill.
B) classified board.
C) golden parachute.
D) white knight.
Q3) What is a white knight?
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Chapter 29: Corporate Governance
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Q1) Which of the following statements is false?
A) If managers have large ownership stakes, then shareholders are more likely to use compensation policies or a stronger board to create the desired incentives.
B) If all else fails, the shareholders' last line of defense against expropriation by self-interested managers is direct action.
C) A shareholder resolution could direct the board to take a specific action, such as discontinuing investment in a particular line of business or country, or removing a poison pill.
D) Any shareholder can submit a resolution that is put to a vote at the annual meeting.
Q2) Directors who are not employees,former employees,or family members of employees and who do not have existing or potential business relationships with the firm are called
A) Monitoring Directors.
B) Independent Directors.
C) Gray Directors.
D) Inside Directors.
Q3) What is the difference between inside,gray,and outside directors?
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Chapter 30: Risk Management
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Q1) What are some of the disadvantages of long-term supply contracts?
Q2) A currency forward contract specifies all of the following EXCEPT
A) the amount of currency to exchange.
B) the spot exchange rate.
C) the delivery date on which the exchange will take place.
D) the currencies to be exchanged.
Q3) Which of the following statements is false?
A) As interest rates change, the market values of the securities and cash flows in the portfolio change as well, which in turn alters the weights used when computing the duration as the value-weighted average maturity.
B) The duration of a portfolio of investments is the simple average of the durations of each investment in the portfolio.
C) Adjusting a portfolio to make its duration neutral is sometimes referred to as immunizing the portfolio, a term that indicates it is being protected against interest rate changes.
D) When the durations of a firm's assets and liabilities are significantly different, the firm has a duration mismatch.
Q4) What is the actuarially fair cost of full insurance?
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Chapter 31: International Corporate Finance
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Q1) How do we make adjustments when a project has inputs and outputs in different currencies?
Q2) What is the pound present value of the project?
Q3) Which of the following statements is false?
A) In some countries, especially in the developing world, all investors do not have equal access to financial securities.
B) Firms may face differential access to markets if there is any kind of asymmetry with respect to information about them.
C) In some cases, a country's risk-free securities are internationally integrated but markets for a specific firm's securities are not.
D) When countries' capital markets are not integrated we call them disintegrated capital markets.
Q4) Under the condition of internationally integrated capital markets,the value of an investment ________ we use in the analysis because of ________.
A) depends on the currency; the Law of One Price
B) depends on the currency; the exchange rate between two currencies
C) does not depend on the currency; the Law of One Price
D) does not depend on the currency; the exchange rate between two currencies
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