Lecture 5 Managing Translation and Economic Exposure

lecture-5-managing-translation-and-economic-exposure

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Depreciation of the euro relative to the U.S. dollar will cause a U.S.-based multinational firm's reported earnings (from the consolidated income statement) to . If a firm desired to protect against this possibility, it could stabilize its reported earnings by euros forward in the foreign exchange market

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Which of the following is an example of economic exposure but not an example of transaction exposure?

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Any restructuring of operations that the difference between a foreign currency's inflows and outflows may economic exposure.

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Whitewater ltd. is a UK company with sales to Canada amounting to C$8 million. Its cost of goods sold attributable to the purchase of Canadian goods is C$6 million. Its interest expense on Canadian loans is C$4 million. Given these exact figures above, the pound value of Whitewater's "earnings before interest and taxes" would if the Canadian dollar appreciates; the pound value of Whitewater's "earnings before taxes" would if the Canadian dollar appreciates.

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With regard to hedging translation exposure, translation losses ; and gains on forward contracts used to hedge translation exposure .

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If the Singapore dollar appreciates against the euro over this year, the consolidated earnings of a euro company with a subsidiary in Singapore will be ____ as a result of the exchange rate movement.

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Assume that a Japanese car manufacturer exports cars to UK dealerships, which are priced in yen. The demand for those cars declines when the yen is strong. The manufacturer also produces some cars in the UK with UK materials and those cars are priced in pounds. The manufacturer could reduce its economic exposure by:

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Wisbeech ltd conducts business in Zambia. Years ago, Wisbeech established a subsidiary in Zambia that has consistently generated very large profits denominated in Zambian kwacha. Wisbeech wishes to restructure its operations to reduce economic exposure. Which of the following is not a feasible way of accomplishing this?

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Which of the following firms is not exposed to translation exposure?

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If revenues and costs are equally sensitive to exchange rate movements, MNCs may reduce their economic exposure by restructuring their operations to shift the sources of costs or revenues to other locations so that:

Lecture 5 Managing Translation and Economic Exposure

Question 1 of 1

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Select the correct answer(s).

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Which of the following is an example of economic exposure but not an example of transaction exposure?

Select the correct answer(s).

(0/0)

Any restructuring of operations that the difference between a foreign currency's inflows and outflows may economic exposure.

Select the correct answer(s).

(0/0)

Select the correct answer(s).

(0/0)

With regard to hedging translation exposure, translation losses ; and gains on forward contracts used to hedge translation exposure .

Select the correct answer(s).

(0/0)

If the Singapore dollar appreciates against the euro over this year, the consolidated earnings of a euro company with a subsidiary in Singapore will be ____ as a result of the exchange rate movement.

Select the correct answer(s).

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Select the correct answer(s).

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Select the correct answer(s).

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Which of the following firms is not exposed to translation exposure?

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If revenues and costs are equally sensitive to exchange rate movements, MNCs may reduce their economic exposure by restructuring their operations to shift the sources of costs or revenues to other locations so that:

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Lecture 5 Managing Translation and Economic Exposure

Question 1 of 1

Time Left

Select the correct answer(s).

(0/0)

Which of the following is an example of economic exposure but not an example of transaction exposure?

Select the correct answer(s).

(0/0)

Any restructuring of operations that ____ the difference between a foreign currency's inflows and outflows may ____ economic exposure.

Select the correct answer(s).

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Select the correct answer(s).

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With regard to hedging translation exposure, translation losses ____; and gains on forward contracts used to hedge translation exposure ____.

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If the Singapore dollar appreciates against the euro over this year, the consolidated earnings of a euro company with a subsidiary in Singapore will be ____ as a result of the exchange rate movement.

Select the correct answer(s).

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Select the correct answer(s).

(0/0)

Select the correct answer(s).

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Which of the following firms is not exposed to translation exposure?

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If revenues and costs are equally sensitive to exchange rate movements, MNCs may reduce their economic exposure by restructuring their operations to shift the sources of costs or revenues to other locations so that:

Select the correct answer(s).

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0

Incorrect

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Overall Percentage

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Rate Quiz

Any restructuring of operations that the difference between a foreign currency's inflows and outflows may economic exposure.

With regard to hedging translation exposure, translation losses ; and gains on forward contracts used to hedge translation exposure .