A Euro-Based Firm Has Received a Large Amount of Cash

question 42

Multiple Choice

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

Understand the role of equilibrium in maximizing total surplus in a market.

Describe the implications of trade policies on the international exchange of goods and the domestic economy.

Interpret market equilibrium from a supply and demand graph.

Analyze the changes in consumer and producer surplus due to shifts in market price.

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Definitions:

Undue Influence

An improper or wrongful persuasion that compromises the free will of someone, making a decision or agreement questionable.

Rescission

The legal act of voiding a contract and returning the parties involved to their states prior to the contract, as if the contract had never existed.

Scienter

Knowledge of wrongdoing or fraudulent intent, especially as a component to proving certain types of fraud.

False Statement

An untrue assertion presented as a fact, intentionally or unintentionally, which could mislead or deceive others.