Diz Co Is a U

question 27

Multiple Choice

Diz Co. is a U.S.-based MNC with net cash inflows of euros and net cash inflows of Swiss francs. These two currencies are highly correlated in their movements against the dollar. Yanta Co. is a U.S.-based MNC that has the same level of net cash flows in these currencies as Diz Co. except that its euros represent net cash outflows. Which firm has a higher exposure to exchange rate risk?

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

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