​Diz Co Is a U

question 3

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.

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Definitions:

Condition Precedent

A legal term describing a condition that must be fulfilled before a contract or agreement becomes effective or before a party is obligated to perform.

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Something that appears real or possible but is neither, often due to being deceptive or misleading.