Question 1

A benefit of leading and lagging is that it does not distort the returns earned by the various affiliates.

Accepted Answer

A) True 
 B)False

Question 2

The seller of a currency call option has the obligation to deliver the specified currency at the exercise price.

Accepted Answer

A) True 
 B)False

Question 3

Currency futures are like currency forwards except that they are marked-to-market daily.

Accepted Answer

A) True 
 B)False

Question 4

Internal methods of reducing the MNC's transaction exposure to currency risk include each of a) through c) EXCEPT

Accepted Answer

A)  multinational netting 
B)  leading and lagging of intracompany transactions 
C)  hedging in the currency forward markets 
D)  Each of the above is a way to reduce transaction exposure internally 
E)  None of the above are a way of reducing transaction exposure internally 
A)  multinational netting 
B)  leading and lagging of intracompany transactions 
C)  hedging in the currency forward markets 
D)  Each of the above is a way to reduce transaction exposure internally 
E)  None of the above are a way of reducing transaction exposure internally

Question 5

Every corporate cash flow denominated in a foreign currency has a transaction exposure to currency risk.

Accepted Answer

A) True 
 B)False

Question 6

Market prices allow the treasury to ______.

Accepted Answer

A)  avoid transactions costs on internal hedges 
B)  benchmark the costs of internal hedges 
C)  use transfer prices to minimize the MNC's tax liability 
D)  More than one of the above 
E)  None of the above 
A)  avoid transactions costs on internal hedges 
B)  benchmark the costs of internal hedges 
C)  use transfer prices to minimize the MNC's tax liability 
D)  More than one of the above 
E)  None of the above

Question 7

The currency risk exposure given the most attention by financial managers is ______.

Accepted Answer

A)  economic exposure 
B)  operating exposure 
C)  transaction exposure 
D)  translation exposure 
E)  None of the above 
A)  economic exposure 
B)  operating exposure 
C)  transaction exposure 
D)  translation exposure 
E)  None of the above

A benefit of leading and lagging is that it does not distort the returns earned by the various affiliates.

The seller of a currency call option has the obligation to deliver the specified currency at the exercise price.

Currency futures are like currency forwards except that they are marked-to-market daily.

Internal methods of reducing the MNC's transaction exposure to currency risk include each of a) through c) EXCEPT

Every corporate cash flow denominated in a foreign currency has a transaction exposure to currency risk.

Market prices allow the treasury to ______.

The currency risk exposure given the most attention by financial managers is ______.

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 Operating 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 9: Managing Transaction Exposure to Currency Risk

A benefit of leading and lagging is that it does not distort the returns earned by the various affiliates.

The seller of a currency call option has the obligation to deliver the specified currency at the exercise price.

Currency futures are like currency forwards except that they are marked-to-market daily.

Internal methods of reducing the MNC's transaction exposure to currency risk include each of a) through c) EXCEPT

Every corporate cash flow denominated in a foreign currency has a transaction exposure to currency risk.

Market prices allow the treasury to ______.

The currency risk exposure given the most attention by financial managers is ______.

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 Operating 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