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On Oct. 20, 2019, WSJ published an article titled Financial Markets Face Fresh Wave of Political Uncertainty: There's Literally Nowhere to Hide. How should this
On Oct. 20, 2019, WSJ published an article titled "Financial Markets Face Fresh Wave of Political Uncertainty: There's Literally Nowhere to Hide". How should this increase in political uncertainty impact firm investment? Group of answer choices Investment should not be affected since firm-level cost of capital does not depend on the overall uncertainty in financial markets Investment should decrease going forward because higher political uncertainty implies higher cost of capital, which implies lower NPV for potential projects Investment should increase going forward because higher political uncertainty implies lower cost of capital, which implies higher NPV for potential projects Investment should increase going forward because higher political uncertainty implies higher demand for goods and services, which implies higher NPV for potential projects Investment should decrease going forward because higher political uncertainty implies that firms need to increase their inventory, which lowers projected cash flows, and thus the NPV for potential projects
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