Global trade increases dependence on one economy, increasing the economic risk for multinational firms (a) True () b) False
Q: Do you agree with the following claim? “U.S. companies with global operations can give you…
A: The question is based on the concept of globalization and its impact on risk by way of…
Q: Internationalization theory suggests that Select one: a. FDI is more likely to take place when the…
A: F.D.I ( Foreign Direct Investment ) occurs in developing countries only in order to boost their…
Q: Give reasons why multinational corperations expand overseas and how they manage the exchange rate…
A: Multinational corporation is said to be the company that operate in various countries that include…
Q: The rise of globalization is due to the many companies that have become multinational corporations…
A: interest rate parity says that EQUILIBRIUM is achieve by change in interest and change in interest…
Q: 6 - Which is not from the benefits of foreign trade? A) Increase in foreign currency revenues B)…
A: foreign trade is the exchange of goods and services across international borders. Benefits from…
Q: How foreign currency risk can affect the value of a multinational company?
A: Foreign currency risk is the risk due to change in the value of domestic currency with respect to…
Q: Which of the following is not among the advantages of international trade? * O Increased competition…
A: International trade means where one country can sell goods in another country.
Q: Which of the following is not a reason for U.S. firms operating in foreign markets? A.Better…
A: Following are the reason for US firms operating in foreign markets-
Q: One major risk of engaging in global trade is that as national economies continue to integrate, an…
A: Global trade is one of the important type of business, which can be engaged for generating finance…
Q: Which of the following is a major benefit of international lending? It eliminates exchange rate risk…
A: Lending is a form of agreement in which one party agrees to allow the other party to use a sum of…
Q: How can the Greater Liberalizations and removal of barrier to trade can stimulate FDI that can…
A: FDI is very important for the growth of business and growth of economy of the nation and FDI is very…
Q: Explain how multinational companies can reduce the foreign currency risk by hedging.
A: The multinational companies are exposed to the foreign currencies because they are operating in…
Q: The rise of globalization is due to the many companies that have become multinational corporations…
A: Relative interest rate constitute as one of the major factors in determining the exchange rates. For…
Q: 4. Interest rate parity The rise of globalization is due to the many companies that have become…
A: The annualized return is calculated by converting the return for less than a year to a return for a…
Q: That export prices always increases and import prices always fall ensure that a. all of the choices…
A: Imports is defined as the outflow of the funds with an exchange of goods or services from the…
Q: Foreign exchange risk
A: Foreign currency is necessary for worldwide business coordination. Foreign exchange administration…
Q: Which of the following choices is the least likely impact associated with a stronger currency for a…
A: When examining the impact of a stronger currency on a country's economy, various factors come into…
Q: True or false, and explain: It is risky to operate multinationally, so it is not always wise to…
A: The above statement is false, it is risk to operate multinational but when the proper measures are…
Q: Explain how exchange rates can affect a firm’s global sales.?
A: The exchange rates can be defined as one country’s currency’s price in terms of the price of another…
Q: Give typing answer with explanation and conclusion Which of the following is an example of foreign…
A: Foreign exchange risk is the risk of financial loss that arises from the fluctuation in exchange…
Q: Investors and MNCs exporting or importing goods and services or making foreign investments…
A: Hedging in Forex is done by an investor to ensure that no financial losses should be incurred if…
Q: A key issue facing financial executives of multinational firms is exposure to exchange rate…
A: Note : As per the bartelby guidelines, only first three parts will be answered. Part A : Accounting…
Q: If a U.S.-based MNC focused completely on exporting, then its valuation would likely be adversely…
A: According to the foreign exchange if the company is exporting to another country and if the exchange…
Q: A U.S. firm will be ________ by dollar _______ if its expenses are more susceptible to exchange rate…
A: There are instances when a company based in USA has expenses that are more susceptible to exchange…
Q: The rise of globalization is due to the many companies that have become multinational corporations…
A: An exchange rate is the rate at which one currency can be exchanged for another currency. It…
Q: Suppose you observe the following spot and forward exchange rates between the U.S. dollar ($) and…
A:
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- Which of the following choices is the least likely impact associated with a stronger currency for a country? O Decreased foreign investment and slower economic growth Lower costs of imports and improved consumer purchasing power Higher inflation and reduced investor confidenceHow can the Greater Liberalizations and removal of barrier to trade can stimulate FDI that can incentivise firms to invest overseasWhich of the following is not a reason for U.S. firms operating in foreign markets? A.Better economic and political environment (in the U.S.) B.Less expensive labor C.Tax incentives D. To achieve international diversification
- One major risk of engaging in global trade is that as national economies continue to integrate, an economic meltdown in one part of the world can have far-reaching impact. True FalseIf a U.S.-based MNC focused completely on exporting, then its valuation would likely be adversely affected if most currencies were expected to appreciate against the dollar over time. Group of answer choices True FalseA key issue facing financial executives of multinational firms is exposure to exchange rate changes.a. Define exposure, differentiating between accounting and economic exposure. What role does inflation play?b. Describe at least three circumstances under which economic exposure is likely to exist? c. Of what relevance are the international Fisher effect and purchasing power parity to your answers to parts a and b? d. What is exchange risk, as distinct from exposure
- 4. Interest rate parity The rise of globalization is due to the many companies that have become multinational corporations for various reasons-for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well-for example, political risk and exchange rate risk. The relationship between interest rates and exchange rates can be represented through the concept of interest rate parity. Consider the following: An American investor is considering investing $1,000 in default-free 90-day Japanese bonds that promise a 4% annual nominal return. • The spot exchange rate is ¥101.12 per dollar. • The 90-day forward exchange rate is 100.25 per dollar. The investor's annualized return on these bonds-if he or she can lock in the dollar return by selling the foreign currency in the forward market-will be…6 - Which is not from the benefits of foreign trade?A) Increase in foreign currency revenuesB) Expansion of market shareC) Opening to foreign competitionD) Gaining the brand imageE) Saving resourcesInvestors and MNCs exporting or importing goods and services or making foreign investments throughout the global economy are faced with an exchange rate risk,which can have severe financial consequences on firms profitability,cash flows,and their market value,if not managed appropriately. MNC's use a number of external techniques of risk(exposure)management and resort to contractual relationships outside thier companies in order to reduce (or redistribute)the risk of foreign exchange losses.What are the determinants of hedging currency risk or foreign exchange exposures which pose risks to MNC's cashflows,competitiveness,marker value and financial reporting.
- Internationalization theory suggests that Select one: a. FDI is more likely to take place when the costs of negotiating, monitoring, and enforcing a contract with a second firm is higher. Ob. FDI is more likely to occur when prices are high, competition is intense and lower trade barriers as well as exchange rates are strong. O c. FDI occurs in developing countries only in order to boost their economies and improve the country position. d. None of the options are applicable. Next pageThat export prices always increases and import prices always fall ensure that a. all of the choices b. the distributional impact of trade is true also for the long-run c. is a reason why trade is resisted by workers in capital-abundant countries d. is a reason why trade is always welcomed by consumers e. none of the aboveA U.S. firm will be ________ by dollar _______ if its expenses are more susceptible to exchange rate movements than its revenue. A. unaffected; weakens B. benefited; strengthens C. benefited; weakens D. unaffected; strengthens