Consider an MNC Based in Canada with Manufacturing Activities in Japan.The

question 20

Multiple Choice

Consider an MNC based in Canada with manufacturing activities in Japan.The result of a change in the ¥/$ exchange rate on the assets and liabilities of the consolidated balance sheet is: Exposed assets $\quad ¥ 700,000,000$
Exposed liabilities $\quad ¥ 500,000,000$ Ignoring transaction exposure in the yen,the translation exposure will indicate a possible need for a "balance sheet hedge" of:

• A) ¥200,000,000 less liabilities denominated in yen.
• B) ¥200,000,000 more assets denominated in yen.
• C) ¥200,000,000 of net exposure denominated in yen.
• D) None of these.

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