PORTFOLIO THEORY DEALS WITH THE SELECTION OF INVESTMENT PROJECTS TH...

9. Portfolio theory deals with the selection of investment projects that would. A. maximize profit B. minimize risk C. maximize the rate of return for a given level of risk D. minimize risk for a given level of return * E. C and D Use the following information to answer the next three questions: A foreign investment project with an initial cost of $15,000 is expected to produce net cash flows of $8,000, $9,000, $10,000, and $11,000 for each of the next four years. The firm's cost of capital is 12 percent, but the international financial manager perceives the risk of this particular project is much higher than 12 percent. The international financial manager feels that a 20 percent discount rate would be appropriate for the project.