In 1990,Goodyear Had Operations in Both Germany and the Netherlands

Multiple Choice

In 1990,Goodyear had operations in both Germany and the Netherlands.In the past the Dutch guilder and Deutsche mark were highly correlated in their movements against the U.S.dollar.If the Dutch unit has net inflows of guilders and the German unit has net inflows of DM,then Goodyear's combined transaction exposure

A) approximately equals the sum of its guilder and DM exposures
B) is less than the sum of its guilder and DM exposures because the currencies are highly correlated
C) is less than the sum of its guilder and DM exposures because of diversification between the company's subsidiaries
D) is not significant due to the highly correlated nature of the two currencies