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A public corporation is considering making investments that expand into foreign markets that it considers to be riskier than its home market. The company tells

A public corporation is considering making investments that expand into foreign markets that it considers to be riskier than its home market. The company tells analysts that it will do so only if it can earn returns "commensurate with the risk of foreign investment."How should it decide whether the returns are commensurate with the perceived risk?What considerations suggest that returns should be higher than in the home market?Under what conditions might it be lower?

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