Diz Co Is a U

Multiple Choice

Diz Co. is a U.S.-based MNC with net cash inflows of euros and net cash inflows of Swiss francs. These two currencies are highly correlated in their movements against the dollar. Yanta Co. is a U.S.-based MNC that has the same level of net cash flows in these currencies as Diz Co. except that its euros represent net cash outflows. Which firm has a higher exposure to exchange rate risk?

A) Diz Co.
B) Yanta Co.
C) the firms have about the same level of exposure.
D) neither firm has any exposure.