QUESTION The Pineapple Express Co. is a U.S.-based MNC with £100,000 net cash outflows and €100,000 net cash inflows. The Mean People Eaters Co. is also a U.S.-based MNC with €100,000 net cash inflows and £100,000 net cash inflows. Both companies know that the dollar/euro exchange rate moves in the same direction as the dollar/British Pound rate. All inflows and outflows have a 30-day maturity. Which firm has a higher foreign exchange transactions exposure? O a. Pineapple Express b. Mean People Eaters O C. The two firms have about the same level of exposure. O d. Neither firm has any exposure. O e. None of the above QUESTION 4 From the point of view of a U.S. based MNC, which of the following is an example of transactions exposure but not an example of economic exposure? O a. An appreciation of the Swiss franc increases the firm's USS value of Swiss franc receivables. O b. A depreciation of the US$ benefits the firm's domestic and foreign sales because it has a potential price advantage over its competitors O c. A depreciation of the euro decreases the firm's cost of euro payables O d. A and C O e. None of the Above

QUESTION The Pineapple Express Co. is a U.S.-based MNC with £100,000 net cash outflows and €100,000 net cash inflows. The Mean People Eaters Co. is also a U.S.-based MNC with €100,000 net cash inflows and £100,000 net cash inflows. Both companies know that the dollar/euro exchange rate moves in the same direction as the dollar/British Pound rate. All inflows and outflows have a 30-day maturity. Which firm has a higher foreign exchange transactions exposure? O a. Pineapple Express b. Mean People Eaters O C. The two firms have about the same level of exposure. O d. Neither firm has any exposure. O e. None of the above QUESTION 4 From the point of view of a U.S. based MNC, which of the following is an example of transactions exposure but not an example of economic exposure? O a. An appreciation of the Swiss franc increases the firm's USS value of Swiss franc receivables. O b. A depreciation of the US$ benefits the firm's domestic and foreign sales because it has a potential price advantage over its competitors O c. A depreciation of the euro decreases the firm's cost of euro payables O d. A and C O e. None of the Above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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