ABC Inc. 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. Jonathan Inc. is a U.S.-based MNC that has the same exposure as ABC Inc. in these currencies, except that its Sunland francs represent cash outflows. Which firm has a high exposure to exchange rate risk? A. neither firm has any exposure. B. ABC Inc. C. the firms have about the same level of exposure. D. Jonathan Inc.

ABC Inc. 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. Jonathan Inc. is a U.S.-based MNC that has the same exposure as ABC Inc. in these currencies, except that its Sunland francs represent cash outflows. Which firm has a high exposure to exchange rate risk? A. neither firm has any exposure. B. ABC Inc. C. the firms have about the same level of exposure. D. Jonathan Inc.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter18: Long-term Debt Financing

Section: Chapter Questions

Problem 1BIC

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