Question 1

MNCs can use ____ to reduce exchange rate risk. This occurs when two parties provide simultaneous loans with an agreement to repay at a specified point in the future.

Accepted Answer

A)  forward contracts 
B)  currency swaps 
C)  parallel loans 
D)  none of the above 
A)  forward contracts 
B)  currency swaps 
C)  parallel loans 
D)  none of the above

Question 2

A euro-based firm has received a large amount of cash inflows periodically in Swiss francs as a result of exporting goods to Switzerland. It has no other business outside the euro area. It could best reduce its exposure to exchange rate risk by:

Accepted Answer

A)  issuing Swiss franc-denominated bonds. 
B)  purchasing Swiss franc-denominated bonds. 
C)  purchasing euro-denominated bonds. 
D)  issuing euro-denominated bonds. 
A)  issuing Swiss franc-denominated bonds. 
B)  purchasing Swiss franc-denominated bonds. 
C)  purchasing euro-denominated bonds. 
D)  issuing euro-denominated bonds.

Question 3

A currency swap between two firms of different countries enables the exchange of ____ for ____ at periodic intervals.

Accepted Answer

A)  stock; one currency 
B)  stock; a portfolio of foreign currencies 
C)  one currency; stock options 
D)  one currency; another currency 
A)  stock; one currency 
B)  stock; a portfolio of foreign currencies 
C)  one currency; stock options 
D)  one currency; another currency

MNCs can use ____ to reduce exchange rate risk. This occurs when two parties provide simultaneous loans with an agreement to repay at a specified point in the future.

A euro-based firm has received a large amount of cash inflows periodically in Swiss francs as a result of exporting goods to Switzerland. It has no other business outside the euro area. It could best reduce its exposure to exchange rate risk by:

A currency swap between two firms of different countries enables the exchange of for at periodic intervals.

Multinational Financial Management: an Overview

International Flow of Funds

International Financial Markets

Exchange Rate Changes

Currency Derivatives

Exchange Rate History and the Role of Governments

International Arbitrage and Interest Rate Parity

Relationships Among Inflation, Interest Rates and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Foreign Direct Investment

Country Risk Analysis

Ethics

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Exam 15: Long-Term Financing

MNCs can use ____ to reduce exchange rate risk. This occurs when two parties provide simultaneous loans with an agreement to repay at a specified point in the future.

A euro-based firm has received a large amount of cash inflows periodically in Swiss francs as a result of exporting goods to Switzerland. It has no other business outside the euro area. It could best reduce its exposure to exchange rate risk by:

A currency swap between two firms of different countries enables the exchange of ____ for ____ at periodic intervals.

Multinational Financial Management: an Overview

International Flow of Funds

International Financial Markets

Exchange Rate Changes

Currency Derivatives

Exchange Rate History and the Role of Governments

International Arbitrage and Interest Rate Parity

Relationships Among Inflation, Interest Rates and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Foreign Direct Investment

Country Risk Analysis

Ethics

Financing International Trade

Short-Term Financing

International Cash Management

Filters

A currency swap between two firms of different countries enables the exchange of for at periodic intervals.