Question1: (TCO G) Transaction exposure reflects:
[A] the exposure of a firm financial statements to exchange rate fluctuations.
[B] the exposure of a firm cash flows to exchange rate fluctuations.
[C] the exposure of a firm ongoing international transactions to exchange rate fluctuations.
[D] the exposure of a firm local currency value to transactions between foreign exchange traders.
Question2: (TCO G) A U.S. MNC has the equivalent of 1 million dollar cash outflows in each of two highly negatively correlated currencies. During ____ dollar cycles, cash outflows are _____.
[A] weak; favorably affected
[B] weak; somewhat stable
[C] weak; adversely affected
[D] none of these
Question3: (TCO G) Your Company will receive C$600,000 in 90 days. The ninety day forward rate in the Canadian dollar is .80 dollars. If you use a forward hedge, you will:
[A] Receive $480,000 today.
[B] Receive $480,000 in 90 days.
[C] Receive $750,000 today.
[D] Receive $750,000 in 90 days.