a. c. 6. 5. Relative purchasing power parity focuses on while absolute purchasing power parity focuses on price levels; price changes. b. inflation, price changes. price changes, price levels. d. price changes, inflation are subject to currency risks All firms b. Only MNCS All MNCs and many domestic firms d. Only foreign-based firms 7. The impact of currency value on liquid financial assets and contractual cash flow is measured by: transaction exposure. b. translation exposure. c. economic exposure. d. operating exposure. 8. In conducting cash flow analysis, key inputs are market demand and prices because a. market demand and prices are fixed and cannot be changed b. revenues and cost estimates are based on these forecasts. market demand and prices are easily determined. d. this information indicates what markets firms should target. 9. In an NPV calculation, the final cash flow is typically the: al e. a. final payment on the investment in the assets used in the project b. proceeds from the sale of the last products produced by the project csalvage value obtained by the firm by selling the remaining assets of the project. d. tax credits that the firm earns through the investment in the project. 10. From the standpoint of cash flow, what is the most obvious difference between domestic and foreign projects? The cash flow from domestic projects is much more certain than it is from foreign projects. b. Cash flow from foreign projects is usually much larger than it is from domestic projects. c. Cash flow from domestic projects is received much quicker than cash flow from foreign projects is received. Domestic projects typically produce cash flow in the domestic currency, while foreign projects produce cash flow in the currency of the foreign country and may even produce spre cummies. a. d