Jacko Co Is a U

question 58

Multiple Choice

Jacko Co. is a U.S.-based MNC with net cash inflows of euros and net cash inflows of Sunland francs. These two currencies are highly negatively correlated in their movements against the dollar. Kriner Co. is a U.S.-based MNC that has the same exposure as Jacko Co. in these currencies, except that its Sunland francs represent cash outflows. Which firm has a high exposure to exchange rate risk?

• A) Jacko Co.
• B) Kriner Co.
• C) the firms have about the same level of exposure.
• D) neither firm has any exposure.