Jacko Co Is a U

question 69

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.

---

Definitions:

Simple Rate Of Return

A method of calculating the return on an investment without taking into account compound interest or the passage of time.

Cash Operating Costs

Direct expenses incurred during regular operations, such as manufacturing costs, labor, and raw materials, excluding non-cash costs like depreciation.

Automating

involves the use of systems and technology to perform tasks with minimal human intervention.

Internal Rate Of Return

A financial metric used to evaluate the profitability of an investment, calculated as the discount rate that makes the net present value (NPV) of all cash flows from the investment equal to zero.