Question

In regards to the perspective of a U.S. investor, which of the below statements is FALSE?
Group of answer choices

a.The cash flows of assets denominated in a foreign currency expose the investor to uncertainty as to the actual level of the cash flow measured in that foreign currency.

b.The actual number of U.S. dollars that the investor eventually gets depends on the exchange rate between the U.S. dollar and the foreign currency at the time the nondollar cash flow is received and exchanged for U.S. dollars.

c.The cash flows of assets denominated in a foreign currency expose the investor to uncertainty as to the actual level of the cash flow measured in U.S. dollars.

d.If the foreign currency depreciates (declines in value) relative to the U.S. dollar (that is, the U.S. dollar appreciates), the dollar value of the cash flows will be proportionately less, leading to foreign exchange risk.

Answer 1

In regards to the perspective of a U.S. investor, the false statement is

a.The cash flows of assets denominated in a foreign currency expose the investor to uncertainty as to the actual level of the cash flow measured in that foreign currency.

Explanation:

The US investor in the foreign market is investing in the foreign currency but has the advantage as the value of the foreign currency is determined in terms of the dollar so the cash flow to US is very likely to free and often benefits the country when other countries evaluate slightly.

The uncertainty being talked about here is much less pertained in the  sense that the US dollar dominates the foreign stock too so the investor has an advantage in predicting when to take out their money.