Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 1
Indicate whether the statement is true or false.
1. A firm’s transaction exposure in any foreign currency is based solely on the size of its open position in that currency.
a.
True
b.
False
2. Some MNCs are subject to economic exposure without being subject to transaction exposure.
a.
True
b.
False
3. Under FASB 52, consolidated earnings are sensitive to the functional currency’s weighted average exchange rate.
a.
True
b.
False
4. An MNC’s stock valuation will not be affected by translation exposure if the MNC’s consolidated financial statements
are prepared according to the accounting rules in FASB 52.
a.
True
b.
False
5. Since earnings can affect stock prices, many MNCs are concerned about translation exposure.
a.
True
b.
False
6. Regression analysis cannot be used to assess the sensitivity of a company’s performance to economic conditions
because economic conditions are unpredictable.
a.
True
b.
False
7. A high correlation between two currencies would be desirable for achieving low exchange rate risk if one is an inflow
currency and the other is an outflow currency.
a.
True
b.
False
8. The VaR method presumes that the distribution of exchange rate movements is normal.
a.
True
b.
False
9. An MNC can avoid translation exposure if its foreign subsidiaries do not remit their earnings to the parent.
a.
True
b.
False
10. A purely domestic firm is never exposed to exchange rate fluctuations.
a.
True
b.
False
11. A company may become more exposed or sensitive to an individual currency’s movements over time for several
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 2
reasons, including a reduction in hedging, a greater involvement in the foreign country, or an increased use of the foreign
currency.
a.
True
b.
False
12. In general, translation exposure is larger with MNCs that have a larger proportion of earnings generated by foreign
subsidiaries.
a.
True
b.
False
13. Assume that exchange rate movements were unusually stable in a recent period (but will not continue to be so stable
in the future) that was used to derive the estimated maximum expected loss based on the VaR method. The estimated
expected loss derived using VaR based on that recent period will likely overestimate the actual maximum expected loss in
the future.
a.
True
b.
False
14. One argument why exchange rate risk is irrelevant to corporations is that shareholders may be able to hedge this risk
individually.
a.
True
b.
False
15. Dollar cash flows associated with two foreign inflow currencies will normally be less volatile if the standard
deviations of the individual currencies are lower.
a.
True
b.
False
16. The exposure of an MNC‘s consolidated financial statements to exchange rate fluctuations is known as transaction
exposure.
a.
True
b.
False
17. The degree to which a firm’s present value of future cash flows can be influenced by exchange rate fluctuations is
referred to as transaction exposure.
a.
True
b.
False
18. The maximum one-day loss estimated using the value-at-risk (VaR) method is independent of the confidence level
used.
a.
True
b.
False
19. Firms with more in foreign costs than in foreign revenues will be favorably affected by a stronger foreign currency.
a.
True
b.
False
20. A reduction in hedging will probably reduce transaction exposure.
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 3
a.
True
b.
False
21. If the functional currencies for reporting purposes are highly correlated, translation exposure is magnified.
a.
True
b.
False
22. Currency correlations are generally negative.
a.
True
b.
False
23. Assume a regression model in which the dependent variable is the firm’s stock price percentage change, and the
independent variable is the percentage change in the foreign currency. The coefficient is negative. This implies that the
company’s stock price increases if the foreign currency appreciates.
a.
True
b.
False
24. U.S. exporters may not necessarily benefit from weak-dollar periods if foreign competitors are willing to reduce their
profit margins.
a.
True
b.
False
25. Two highly negatively correlated currencies move in tandem almost as if they are the same currency.
a.
True
b.
False
26. The transaction exposure of two inflow currencies is offset when the correlation between the currencies is high.
a.
True
b.
False
27. The Canadian dollar’s volatility has changed over time but is normally less than the volatility of other currencies.
a.
True
b.
False
28. A set of currency cash inflows is more volatile if the correlations are low.
a.
True
b.
False
29. If the net inflow of one currency is about the same amount as a net outflow in another currency, the firm will benefit if
these two currencies are negatively correlated because the transaction exposure is offset.
a.
True
b.
False
30. Because creditors may prefer that firms maintain low exposure to exchange rate risk, and because investors may prefer
corporations to perform hedging for them, exchange rate risk is probably relevant.
a.
True
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 4
b.
False
31. Purely domestic firms are never affected by economic exposure.
a.
True
b.
False
32. Translation exposure affects an MNC’s cash flows.
a.
True
b.
False
33. If positions in a specific currency among an MNC’s subsidiaries offset each other, the decision by one subsidiary to
hedge its position in that currency would increase the MNC’s overall exposure.
a.
True
b.
False
34. The VaR method assumes that the volatility (standard deviation) of exchange rate movements changes over time.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
35. Under FASB 52:
a.
translation gains and losses are included in the reported net income.
b.
translation gains and losses are included in stockholder’s equity.
c.
translation gains and losses are included in the reported net income AND translation gains and losses are
included in stockholder’s equity.
d.
None of these are correct.
36. If the U.S. dollar appreciates, an MNC’s:
a.
U.S. sales will probably decrease.
b.
exports denominated in U.S. dollars will probably increase.
c.
interest owed on foreign funds borrowed will probably increase.
d.
exports denominated in foreign currencies will probably increase.
e.
All of these are correct.
37. Magent Co. is a U.S. company that has exposure to the Swiss franc (SF) and Danish kroner (DK). It has net inflows of
SF200 million and net outflows of DK500 million. The present exchange rate of the SF is about $.40 while the present
exchange rate of the DK is $.10. Magent Co. has not hedged these positions. The SF and DK are highly correlated in their
movements against the dollar. If the dollar weakens, then Magent Co. will:
a.
benefit, because the dollar value of its SF position exceeds the dollar value of its DK position.
b.
benefit, because the dollar value of its DK position exceeds the dollar value of its SF position.
c.
be adversely affected, because the dollar value of its SF position exceeds the dollar value of its DK position.
d.
be adversely affected, because the dollar value of its DK position exceeds the dollar value of its SF position.
38. A firm produces products for which substitute products are produced in all countries. Appreciation of the firm’s local
currency should:
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 5
a.
increase local sales as it reduces foreign competition in local markets.
b.
increase the firm’s exports denominated in the local currency.
c.
increase the returns earned on the firm’s foreign bank deposits.
d.
increase the firm’s cash outflow required to pay for imported supplies denominated in a foreign currency.
e.
None of these are correct.
39. The following regression model was run by a U.S.-based MNC to determine its degree of economic exposure as it
relates to the Australian dollar and Sudanese dinar:
PCFt = a0 + a1et +
t
where the term on the left-hand side is the percentage change in inflation-adjusted cash flows measured in the firm’s home
currency over period t, and et is the percentage change in the exchange rate of the currency over period t. The regression
was run over two subperiods for each of the two currencies, with the following results:
Regression Coefficient (a1)
Regression Coefficient (a1)
Currency
Earlier Subperiod
Recent Subperiod
Australian dollar (A$)
−.80
.10
Sudanese dinar (SDD)
.20
.25
Based on these results, which of the following statements is probably not true?
a.
The MNC was more sensitive to movements in the Australian dollar than in the dinar in the earlier subperiod.
b.
The MNC was more sensitive to movements in the dinar than in the Australian dollar in the more recent
subperiod.
c.
The MNC probably had more outflows than inflows in Australian dollars in the earlier subperiod.
d.
The MNC probably had more inflows than outflows denominated in dinar in the more recent subperiod.
e.
All of these are true.
40. Appreciation in a firm’s local currency causes a(n) ____ in cash inflows and a(n) ____ in cash outflows.
a.
reduction; reduction
b.
increase; increase
c.
increase; reduction
d.
reduction; increase
41. Transaction exposure reflects:
a.
the exposure of a firm’s international transactions to exchange rate fluctuations.
b.
the exposure of a firm’s local currency value to transactions between foreign exchange traders.
c.
the exposure of a firm’s financial statements to exchange rate fluctuations.
d.
the exposure of a firm’s cash flows to exchange rate fluctuations.
42. Assume that the British pound and Swiss franc are highly correlated. A U.S. firm anticipates the equivalent of $1
million cash outflows in francs and the equivalent of $1 million cash outflows in pounds. During a ____ cycle, the firm is
____ affected by its exposure.
a.
strong dollar; favorably
b.
weak dollar; not
c.
strong dollar; not
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 6
d.
weak dollar; favorably
43. Generally, MNCs with less foreign costs than foreign revenues will ____ affected by a ____ foreign currency.
a.
be favorably; stronger
b.
not be; stronger
c.
be favorably; weaker
d.
not be; weaker
e.
not be; stronger AND not be; weaker
44. If a U.S. firm’s sales in Australia are much greater than its cost of goods sold in Australia, the appreciation of the
Australian dollar has a ____ impact on the firm’s ____.
a.
positive; interest expenses
b.
positive; gross profit
c.
negative; interest expenses
d.
negative; gross profit
Exhibit 10-2
Volusia, Inc. is a U.S.-based exporting firm that expects to receive payments denominated in both euros and Canadian
dollars in one month. Based on today’s spot rates, the dollar value of the funds to be received is estimated at $500,000 for
the euros and $300,000 for the Canadian dollars. Based on data for the last 50 months, Volusia estimates the standard
deviation of monthly percentage changes to be 8 percent for the euro and 3 percent for the Canadian dollar. The
correlation coefficient between the euro and the Canadian dollar is 0.30.
45. Refer to Exhibit 10-2. What is the portfolio standard deviation?
a.
3.00 percent
b.
5.44 percent
c.
17.98 percent
d.
None of these are correct.
46. Consider an MNC that is exposed to the Taiwan dollar (TWD) and the Egyptian pound (EGP); 25 percent of the
MNC’s funds are Taiwan dollars and 75 percent are pounds. The standard deviation of exchange movements is 7 percent
for Taiwan dollars and 5 percent for pounds. The correlation coefficient between movements in the value of the Taiwan
dollar and the pound is .7. Based on this information, the standard deviation of this two-currency portfolio is
approximately:
a.
5.13 percent.
b.
2.63 percent.
c.
4.33 percent.
d.
5.55 percent.
47. Which of the following is not true regarding currency correlations?
a.
Two highly positively correlated currencies act almost as if they are the same currency.
b.
If two inflow currencies are highly positively correlated, transaction exposure is somewhat offset.
c.
If two inflow currencies are negatively correlated, transaction exposure is somewhat offset.
d.
If two currencies, one an inflow currency and the other an outflow currency, are highly positively correlated,
transaction exposure is somewhat offset.
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 7
48. According to the text, currency volatility levels ____ perfectly stable over time, and currency correlations ____
perfectly stable over time.
a.
are; are not
b.
are; are
c.
are not; are not
d.
are not; are
49. Translation exposure reflects:
a.
the exposure of a firm’s international transactions to exchange rate fluctuations.
b.
the exposure of a firm’s local currency value to transactions between foreign exchange traders.
c.
the exposure of a firm’s financial statements to exchange rate fluctuations.
d.
the exposure of a firm’s cash flows to exchange rate fluctuations.
50. A firm produces products for which substitute products are produced in all countries. Depreciation of the firm’s local
currency should:
a.
decrease local sales as foreign competition in local markets is reduced.
b.
decrease the firm’s exports denominated in the local currency.
c.
decrease the returns earned on the firm’s foreign bank deposits.
d.
decrease the firm’s cash outflow required to pay for imported supplies denominated in a foreign currency.
e.
None of these are correct.
51. Consider an MNC that is exposed to the Bulgarian lev (BGL) and the Romanian leu (ROL); 30 percent of the MNC’s
funds are lev and 70 percent are leu. The standard deviation of exchange movements is 10 percent for lev and 15 percent
for leu. The correlation coefficient between movements in the value of the lev and the leu is .85. Based on this
information, the standard deviation of this two-currency portfolio is approximately:
a.
17.28 percent.
b.
13.15 percent.
c.
14.50 percent.
d.
12.04 percent.
52. In general, a firm that concentrates on local sales, has very little foreign competition, and obtains foreign supplies
(denominated in foreign currencies) will likely ____ a(n) ____ local currency.
a.
be hurt by; appreciated
b.
benefit from; depreciated
c.
be hurt by; depreciated
d.
None of these are correct.
53. Vada, Inc. exports computers to Australia, invoiced in U.S. dollars. Its main competitor is located in Japan. Vada is
subject to:
a.
economic exposure.
b.
transaction exposure.
c.
translation exposure.
d.
economic exposure AND transaction exposure.
54. Assume that your firm is an importer of Mexican chairs denominated in pesos. Your competition is mainly U.S.
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 8
producers of chairs. You wish to assess the relationship between the percentage change in the firm’s stock price (SPt) and
the percentage change in the peso’s value relative to the dollar (PESOt). SPt is the dependent variable. You apply the
regression model to an earlier subperiod and a more recent subperiod. In the recent subperiod, you increased your
importing volume. You should expect that the regression coefficient in the PESOt variable would be ____ in the first
subperiod and ____ in the second subperiod.
a.
negative; positive
b.
positive; positive
c.
positive; negative
d.
negative; negative
55. Jensen Co. expects to pay €50,000 in one month for its imports from France. It also expects to receive €200,000 for its
exports to Belgium in one month. Jensen estimates the standard deviation of monthly percentage changes of the euro to be
2.5 percent over the last 50 months. Assume that these percentage changes are normally distributed. Using the value-at–
risk (VaR) method based on a 97.5 percent confidence level, what is the maximum one-month loss in dollars if the
expected percentage change of the euro during next month is 2 percent? Assume that the current spot rate of the euro
(before considering the maximum one-month loss) is $1.35.
a.
−$4,303
b.
−$7,830
c.
−$5,873
d.
−$1,958
56. When the dollar strengthens, the reported consolidated earnings of U.S.-based MNCs are ____ affected by translation
exposure. When the dollar weakens, the reported consolidated earnings are ____.
a.
favorably; favorably affected but by a smaller degree
b.
favorably; favorably affected by a higher degree
c.
unfavorably; favorably affected
d.
favorably; unfavorably affected
57. The ____ the percentage of an MNC’s business conducted by its foreign subsidiaries, the ____ the percentage of a
given financial statement item that is susceptible to translation exposure.
a.
greater; smaller
b.
smaller; greater
c.
greater; greater
d.
None of these are correct.
58. Which of the following operations benefit(s) from depreciation of the firm’s local currency?
a.
borrowing in a foreign country and converting the funds to the local currency prior to the depreciation
b.
purchasing foreign supplies
c.
investing in foreign bank accounts denominated in foreign currencies prior to depreciation of the local
currency
d.
borrowing in a foreign country and converting the funds to the local currency prior to the depreciation AND
purchasing foreign supplies
59. ____ is (are) not a determinant of translation exposure.
a.
The MNC’s degree of foreign involvement
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 9
b.
The locations of foreign subsidiaries
c.
The local (domestic) earnings of the MNC
d.
The accounting methods used
60. Jenco Co. imports raw materials from Japan, invoiced in U.S. dollars. The price it pays is not expected to change for
the next several years. If the Japanese yen appreciates, Jenco’s imports from Japan will probably ____ and if the Japanese
yen depreciates, its imports from Japan will probably ____.
a.
increase; decrease
b.
decrease; increase
c.
increase; stay the same
d.
stay the same; stay the same
61. A U.S. MNC has the equivalent of $1 million cash outflows in each of two highly negatively correlated currencies.
During ____ dollar cycles, cash outflows are ____.
a.
weak; somewhat stable
b.
weak; favorably affected
c.
weak; adversely affected
d.
None of these are correct.
62. If a U.S. firm’s cost of goods sold exposure is much greater than its sales exposure in Switzerland, the Swiss franc’s
depreciation against the dollar will have a ____ overall impact on ____.
a.
positive; revenue denominated in Swiss francs
b.
positive; gross profit
c.
negative; gross profit
d.
negligible; gross profit
63. Economic exposure can affect:
a.
MNCs only.
b.
purely domestic firms only.
c.
MNCs only AND purely domestic firms only.
d.
None of these are correct.
64. Jacko Co. is a U.S.-based MNC with net cash inflows of euros and net cash inflows of Sunland francs. These two
currencies are highly negatively correlated in their movements against the dollar. Kriner Co. is a U.S.-based MNC that has
the same exposure as Jacko Co. in these currencies, except that its Sunland francs represent cash outflows. Which firm has
a higher exposure to exchange rate risk?
a.
Jacko Co.
b.
Kriner Co.
c.
The firms have about the same level of exposure.
d.
Neither firm has any exposure.
65. Diz Co. is a U.S.-based MNC with net cash inflows of euros and net cash inflows of Swiss francs. These two
currencies are highly correlated in their movements against the dollar. Yanta Co. is a U.S.-based MNC that has the same
level of net cash flows in these currencies as Diz Co. except that its euros represent net cash outflows. Which firm has a
higher exposure to exchange rate risk?
a.
Diz Co.
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 10
b.
Yanta Co.
c.
The firms have about the same level of exposure.
d.
Neither firm has any exposure.
66. Economic exposure refers to:
a.
the exposure of a firm’s international transactions to exchange rate fluctuations.
b.
the exposure of a firm’s local currency value to transactions between foreign exchange traders.
c.
the exposure of a firm’s financial statements to exchange rate fluctuations.
d.
the exposure of a firm’s cash flows to exchange rate fluctuations.
e.
the exposure of a country’s economy (specifically GDP) to exchange rate fluctuations.
67. Treck Co. expects to pay €200,000 in one month for its imports from Spain. It also expects to receive €250,000 for its
exports to Italy in one month. Treck Co. estimates the standard deviation of monthly percentage changes of the euro to be
3 percent over the last 40 months. Assume that these percentage changes are normally distributed. Using the value-at-risk
(VaR) method based on a 95 percent confidence level, what is the maximum one-month loss in dollars if the expected
percentage change of the euro during next month is −2 percent? Assume that the current spot rate of the euro (before
considering the maximum one-month loss) is $1.23.
a.
−$38,468
b.
−$21,371
c.
−$17,097
d.
−$4,274
68. Generally, MNCs with less foreign revenues than foreign costs will be ____ affected by a ____ foreign currency.
a.
favorably; stronger
b.
favorably; weaker
c.
not; stronger
d.
not; weaker
69. Yomance Co. is a U.S. company that has exposure to Japanese yen and British pounds. It has net inflows of 5,000,000
yen and net outflows of 60,000 pounds. The present exchange rate of the Japanese yen is $.012 while the present
exchange rate of the British pound is $1.50. Yomance Co. has not hedged its positions. The yen and pound movements
against the dollar are highly and positively correlated. If the dollar strengthens, then Yomance Co. will:
a.
benefit, because the dollar value of its pound position exceeds the dollar value of its yen position.
b.
benefit, because the dollar value of its yen position exceeds the dollar value of its pound position.
c.
be adversely affected, because the dollar value of its pound position exceeds the dollar value of its yen
position.
d.
be adversely affected, because the dollar value of its yen position exceeds the dollar value of its pound
position.
70. Lampon Co. is a U.S. firm that has a subsidiary in Hong Kong that produces light fixtures and sells them to Japan,
denominated in Japanese yen. Its subsidiary pays all of its expenses, including the cost of goods sold, in U.S. dollars. The
Hong Kong dollar is pegged to the U.S. dollar. If the Japanese yen appreciates against the U.S. dollar, the Hong Kong
subsidiary’s revenue will ____, and its expenses will ____.
a.
increase; decrease
b.
decrease; remain unchanged
c.
decrease; increase
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 11
d.
increase; remain unchanged
71. Vermont Co. has one foreign subsidiary. Its translation exposure is directly affected by each of the following, except:
a.
the interest rate in the country of the subsidiary.
b.
the proportion of business conducted by the subsidiary.
c.
its accounting method.
d.
the exchange rate movements of the subsidiary’s currency.
72. Which of the following operations benefits from appreciation of the firm’s local currency?
a.
borrowing in a foreign currency and converting the funds to the local currency prior to the appreciation
b.
receiving earnings dividends from foreign subsidiaries
c.
purchasing supplies locally rather than overseas
d.
exporting to foreign countries
73. The maximum one-day loss computed for the value–at-risk (VaR) method does not depend on:
a.
the expected percentage change in the currency for the next day.
b.
the standard deviation of the daily percentage changes in the currency over a previous period.
c.
the current level of interest rates.
d.
the confidence level used.
74. Assume that the Japanese yen is expected to depreciate substantially over the next year. A U.S.-based MNC has a
subsidiary in Japan, where its costs exceed revenues. The overall value of the MNC will ____ because of the yen’s
depreciation.
a.
decrease
b.
increase
c.
remain unchanged
d.
decrease OR remain unchanged
75. Subsidiary A of Mega Corp. has net inflows in Australian dollars of A$1,000,000, while Subsidiary B has net
outflows in Australian dollars of A$1,500,000. The expected exchange rate of the Australian dollar is $.55. What is the
net inflow or outflow as measured in U.S. dollars?
a.
$500,000 outflow
b.
$500,000 inflow
c.
$275,000 inflow
d.
$275,000 outflow
76. Which of the following is not a form of exposure to exchange rate fluctuations?
a.
transaction exposure
b.
credit exposure
c.
economic exposure
d.
translation exposure
77. Lazer Co. is a U.S. firm that exports computers to Belgium, invoiced in euros, and to Italy, invoiced in dollars.
Additionally, Lazer Co. has a subsidiary in South Korea that produces computers and sells them there. Lazer also has
competitors in different countries. Lazer Co. is subject to:
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 12
a.
transaction exposure.
b.
economic exposure.
c.
translation exposure.
d.
All of these are correct.
78. If a U.S. firm’s cost of goods sold in Switzerland is much greater than its sales in Switzerland, the appreciation of the
Swiss franc has a ____ impact on the firm’s ____.
a.
positive; interest expenses
b.
positive; gross profit
c.
negative; gross profit
d.
negative; interest expenses
79. If an MNC expects cash inflows of equal amounts in two currencies, and the two currencies are ____ correlated, the
MNC’s transaction exposure is relatively ____.
a.
negatively; high
b.
negatively; low
c.
positively; low
d.
None of these are correct.
Exhibit 10-2
Volusia, Inc. is a U.S.-based exporting firm that expects to receive payments denominated in both euros and Canadian
dollars in one month. Based on today’s spot rates, the dollar value of the funds to be received is estimated at $500,000 for
the euros and $300,000 for the Canadian dollars. Based on data for the last 50 months, Volusia estimates the standard
deviation of monthly percentage changes to be 8 percent for the euro and 3 percent for the Canadian dollar. The
correlation coefficient between the euro and the Canadian dollar is 0.30.
80. Refer to Exhibit 10-2. Assuming an expected percentage change of 0 percent for each currency during the next month,
what is the maximum one-month loss of the currency portfolio? Use a 95 percent confidence level and assume the
monthly percentage changes for each currency are normally distributed.
a.
−9 percent
b.
−30 percent
c.
−5 percent
d.
None of these are correct.
81. Assume that Mill Corp., a U.S.-based MNC, has applied the following regression model to estimate the sensitivity of
its cash flows to exchange rate movements:
PCFt = a0 + a1et +
t
where the term on the left-hand side is the percentage change in inflation-adjusted cash flows measured in the firm’s home
currency over period t, and et is the percentage change in the exchange rate of the currency over period t. The regression
model estimates a coefficient of a1 of 2. This indicates that if the foreign currency:
a.
appreciates by 1 percent, Mill’s cash flows will decline by 2 percent.
b.
appreciates by 1 percent, Mill’s cash flows will decline by .2 percent.
c.
depreciates by 1 percent, Mill’s cash flows will increase by 2 percent.
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 13
d.
depreciates by 1 percent, Mill’s cash flows will decline by 2 percent.
e.
None of these are correct.
82. U.S.-based Majestic Co. sells products to U.S. consumers and purchases all of its materials from U.S. suppliers. Its
main competitor is located in Belgium. Majestic Co. is subject to:
a.
economic exposure.
b.
translation exposure.
c.
transaction exposure.
d.
no exposure to exchange rate fluctuations.
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 14
Name:
Class:
Date:
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 16
52. c
53. a
54. d
55. c
56. c
57. c
58. c
59. c
60. d
61. a
62. b
63. c
64. b
65. a
66. d
67. d
68. b
69. a
70. d
71. a
72. a
73. c
74. b
75. d
76. b
Name:
Class:
Date:
Copyright Cengage Learning. Powered by Cognero.
Page 17