(a)Given the parity conditions among the exchange rates (spot and forward) and interest rates, namely the interest rate parity, and the international Fisher effect, explain the situations to justify MNCs actions to invest their excess cash in foreign countries

(b)Cost of capital tends to be higher in the emerging markets. Explain the two factors that drive the higher cost of equity in the emerging markets. Similarly, explain the two factors that drive the higher cost of debt in the emerging markets

(c)Explain how MNCs would to take into account inflation in the host country when performing capital budgeting analysis