Exchange Rate Risk Exists If the Firm's Free Cash Flows

question 72

True/False

Exchange rate risk exists if the firm's free cash flows are correlated with the spot exchange rate.

---

Definitions:

CVA (Stroke)

A medical condition characterized by rapid loss of brain function due to a disturbance in the blood supply to the brain, known as cerebral vascular accident.

Normal Saline Irrigation

A medical procedure involving the flushing of body tissues with a solution of sodium chloride to clean wounds or clear nasal passages.

Draining Wound

A wound that produces fluid or pus, often indicating infection or the process of cleaning and healing.

Fluid Balance

The equilibrium maintained between fluid intake and fluid loss in the body to ensure proper physiological functioning.