Answer the below questions with at least five sentences each.
1) Present the general decision rule for NPV. If a project has NPV = 0, should a manager accept the project?
2) Define purchasing power parity. What is the importance of purchasing power parity to an analyst attempting to establish value for a company located in an emerging market.
3) Why might inflation pose more problems in evaluating foreign firms than in evaluating a domestic business?
4) Discuss some examples of political risks facing firms that are investing in other parts of the world.
5) Why might there be an advantage in being a minority investor in an emerging market as contrasted to majority ownership?
6) Why might the cost of capital be higher in emerging markets than in domestic ones?
7) How can you use financial futures markets to hedge such risks as foreign exchange risk?