One Argument for Exchange Rate Irrelevance Is That

question 56

Multiple Choice

One argument for exchange rate irrelevance is that:

• A) MNCs can hedge exchange rate exposure much more effectively than individual investors.
• B) diversified stakeholders will not be affected by exchange rate movements because of offsetting effects.
• C) purchasing power parity does not hold very well.
• D) MNCs are typically not diversified across numerous countries.

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Definitions:

Preliminary Cash Balance

An initial estimate of a company's cash balance at the beginning of a financial period, before any adjustments are made.

Cash Receipts

The total amount of cash collected by a business during a given period, including all sources of income.

Budgeted Income Statement

A financial statement that forecasts the revenue, expenses, and net income for a future period, based on management's expectations.

Managerial Accounting

Accounting practices aimed at aiding managers in planning, directing, and controlling operational activities through financial data analysis.