​Yomance Co

question 7

Multiple Choice

​Yomance Co. is a U.S. company that has exposure to Japanese yen and British pounds. It has net inflows of 5,000,000 yen and net outflows of 60,000 pounds. The present exchange rate of the Japanese yen is $.012 while the present exchange rate of the British pound is $1.50. Yomance Co. has not hedged its positions. The yen and pound movements against the dollar are highly and positively correlated. If the dollar strengthens, then Yomance Co. will:

• A) ​benefit, because the dollar value of its pound position exceeds the dollar value of its yen position.
• B) ​benefit, because the dollar value of its yen position exceeds the dollar value of its pound position.
• C) ​be adversely affected, because the dollar value of its pound position exceeds the dollar value of its yen position.
• D) ​be adversely affected, because the dollar value of its yen position exceeds the dollar value of its pound position.

---

Definitions:

Bureau

An administrative unit or a specialized agency, typically within a government or organization, responsible for a specific area of operation or a type of activity.

Finishes

The final surface application or detailing of a product, important for aesthetics and functionality.

Townhome

A Townhome, also known as a townhouse, is a type of multi-floor home that shares one or more walls with adjacent properties but has its own independent entrance.