A Multinational Corporation Is Involved in a Country Whose Currency

question 104

Multiple Choice

A multinational corporation is involved in a country whose currency is likely to decline in value.The corporation should

• A) lead if the corporation has a net liability (short) position.
• B) lag if the corporation has a net asset (long) position.
• C) lead regardless of whether the corporation has a net asset or net liability position.
• D) lag if the corporation has a net liability (short) position.

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Definitions:

Times Interest Earned Ratio

A financial ratio that compares a company's operating income to its interest expenses, indicating how well it can cover interest payments with earnings before interest and taxes.

Interpret

To explain or understand the meaning of something, often involving analysis or putting data into context.

Years

Units of time equal to 365 or 366 days, measuring the time elapsed or duration.