Explain briefly how currency risk adjustment

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Reference no: EM131897363

1. Explain briefly how currency risk adjustment can be done in foreign project valuation (aka multinational capital budgeting) and importance of such exchange risk adjustment and its benefits for multinational financial-managers.

2. Carolina Insurance Company, an all-equity life insurance firm, is considering the purchase of a fire insurance company. The fire insurance company is expected to generate a return of 20 percent with a beta of 2.5. If the risk-free rate is 8 percent and the market risk premium is 6 percent, the expected return from the insurance company is _____.

(a) 23%

(b) 8%

(d) 10%

(e) 29%

Reference no: EM131897363

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