A US-headquartered MNC is assessing its transaction exposures. Its projected cash flows are as follows for the next year:
|
Currency
|
Total inflow
|
Total outflow
|
Current exchange rate in US$
|
| Ruritanian doppels (RUD) |
RUD 4 million |
RUD 2 million |
$ .15 |
| British pounds (GBP) |
GBP 2 million |
GBP 1 million |
$1.50 |
| Batavian dracs (BTD) |
BTD 3 million |
BTD 4 million |
$ .30 |
What is your assessment as to the firm's degree of economic exposure? Assume that the RUD and the BTD move in tandem against the US$.