Question 1

The main advantage of a financial market hedge of operating exposure to currency risk is that ______.

Accepted Answer

A)  financial market hedges can completely cancel operating exposures to currency risk 
B)  it is relatively easy to assess the effectiveness of a financial market hedge of operating exposure 
C)  the costs of buying or selling financial instruments are low compared to the costs of investing or disinvesting in real assets 
D)  the uncertain cash flows of operating exposures to currency risk are exactly offset by the uncertain outcomes of a financial market hedge 
E)  None of the above 
A)  financial market hedges can completely cancel operating exposures to currency risk 
B)  it is relatively easy to assess the effectiveness of a financial market hedge of operating exposure 
C)  the costs of buying or selling financial instruments are low compared to the costs of investing or disinvesting in real assets 
D)  the uncertain cash flows of operating exposures to currency risk are exactly offset by the uncertain outcomes of a financial market hedge 
E)  None of the above

Question 2

The classic importer buys goods in segmented foreign markets and sells them in local markets.

Accepted Answer

A) True 
 B)False

Question 3

The _______ is positively exposed to the real value of the domestic currency.

Accepted Answer

A)  classic exporter 
B)  classic importer 
C)  typical domestic firm 
D)  globally competitive firm 
E)  None of the above 
A)  classic exporter 
B)  classic importer 
C)  typical domestic firm 
D)  globally competitive firm 
E)  None of the above

Question 4

Operating exposure to currency risk is easy to hedge with currency forwards.

Accepted Answer

A) True 
 B)False

Question 5

Exposure to currency risk ______.

Accepted Answer

A)  can be thought of as a regression coefficient 
B)  cannot be measured by conventional methods 
C)  is equal to the price elasticity of demand 
D)  is equal to the variability of currency values 
E)  is equal for all companies 
A)  can be thought of as a regression coefficient 
B)  cannot be measured by conventional methods 
C)  is equal to the price elasticity of demand 
D)  is equal to the variability of currency values 
E)  is equal for all companies

Question 6

When goods markets are segmented from other markets, goods prices are determined ______.

Accepted Answer

A)  in foreign markets 
B)  in the global market 
C)  in the local market 
D)  All of the above 
E)  None of the above 
A)  in foreign markets 
B)  in the global market 
C)  in the local market 
D)  All of the above 
E)  None of the above

The main advantage of a financial market hedge of operating exposure to currency risk is that ______.

The classic importer buys goods in segmented foreign markets and sells them in local markets.

The _______ is positively exposed to the real value of the domestic currency.

Operating exposure to currency risk is easy to hedge with currency forwards.

Exposure to currency risk ______.

When goods markets are segmented from other markets, goods prices are determined ______.

An Introduction to Multinational Finance

World Trade and the International Monetary System

Foreign Exchange and Eurocurrency Markets

The International Parity Conditions and Their Consequences

Extension: the International Parity Conditions and Their Consequences

Currency Futures and Futures Markets

Currency Options and Options Markets

Currency Swaps and Swaps Markets

Multinational Treasury Management

Extension: Multinational Treasury Management

Managing Transaction Exposure to Currency Risk

Managing Translation Exposure and Accounting for Financial Transactions

Foreign Market Entry and Country Risk Management

Multinational Capital Budgeting

Multinational Capital Structure and Cost of Capital

Taxes and Multinational Corporate Strategy

Real Options and Cross-Border Investment Strategy

Corporate Governance and the International Market for Corporate Control

International Capital Markets

International Portfolio Diversification

International Asset Pricing

Filters

Exam 10: Managing Operating Exposure to Currency Risk

The main advantage of a financial market hedge of operating exposure to currency risk is that ______.

The classic importer buys goods in segmented foreign markets and sells them in local markets.

The _______ is positively exposed to the real value of the domestic currency.

Operating exposure to currency risk is easy to hedge with currency forwards.

Exposure to currency risk ______.

When goods markets are segmented from other markets, goods prices are determined ______.

An Introduction to Multinational Finance

World Trade and the International Monetary System

Foreign Exchange and Eurocurrency Markets

The International Parity Conditions and Their Consequences

Extension: the International Parity Conditions and Their Consequences

Currency Futures and Futures Markets

Currency Options and Options Markets

Currency Swaps and Swaps Markets

Multinational Treasury Management

Extension: Multinational Treasury Management

Managing Transaction Exposure to Currency Risk

Managing Translation Exposure and Accounting for Financial Transactions

Foreign Market Entry and Country Risk Management

Multinational Capital Budgeting

Multinational Capital Structure and Cost of Capital

Taxes and Multinational Corporate Strategy

Real Options and Cross-Border Investment Strategy

Corporate Governance and the International Market for Corporate Control

International Capital Markets

International Portfolio Diversification

International Asset Pricing

Filters