9. Multinational capital budgeting In the following table, correctly identify whether each type of risk being described is an exchange rate risk or a political risk. Exchange Rate Risk Political Risk O Risk Description The risk that action by the host country will reduce the value of the investment The risk of expropriation (setzure) of a foreign subsidiary's assets by the host country or restrictions on cash flows to the parent company The uncertainty associated with the value of cash flows generated in one currency and then converted to another O Identify whether each of the following statements is true or false, True False 0 o 0 Statements Multinational capital budgeting is not always riskier than domestic investment. The firm may incur less risk, because of international diversification Generally, the political risk related to foreign Investment is added to the required rate of return A technique to lower the risk of multinational capital budgeting is to finance the foreign subsidiary with funds raised in the host country A tool to lower the risk of multinational capital budgeting is to purchase insurance against the loss from expropriation of funds. o o o o