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AU.S.firm is interested in acquiring a Malaysian company in the electronics industry. Suppose the U.S. and Malaysian markets are segmented. Let MS stand for the

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AU.S.firm is interested in acquiring a Malaysian company in the electronics industry. Suppose the U.S. and Malaysian markets are segmented. Let MS stand for the Malaysian currency. Ringgit. Information relevant to the cost-of-capital calculations are as follows: U.S. Malaysian Market Market ($) (M$) B 0.60 1.00 15% 16% 7% 8.5% The difference in costs of capital in MS between the two segmented markets suggests that O Both A and B None of the above o US investors see many Malaysian-specific risks of investment as diversifiable, not requiring a risk premium Malaysian investors see Malaysian specific risk as systematic and require a risk premium for holding the stock

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