In 1990,Goodyear Had Operations in Both Germany and the Netherlands

question 34

Multiple Choice

In 1990,Goodyear had operations in both Germany and the Netherlands.In the past the Dutch guilder and Deutsche mark were highly correlated in their movements against the U.S.dollar.If the Dutch unit has net inflows of guilders and the German unit has net inflows of DM,then Goodyear's combined transaction exposure

• A)approximately equals the sum of its guilder and DM exposures
• B)is less than the sum of its guilder and DM exposures because the currencies are highly correlated
• C)is less than the sum of its guilder and DM exposures because of diversification between the company's subsidiaries
• D)is not significant due to the highly correlated nature of the two currencies

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Definitions:

Foot-In-The-Door Technique

A persuasion strategy where a person is led to agree to a small request first, making them more likely to comply with a larger request later.

Response Cue

A signal or stimulus that indicates how to react or what action to take next in a given situation.

Compliance

The act of conforming to, following, or adhering to rules, standards, or laws, or in medicine, the degree to which a patient correctly follows medical advice.

Explicit Request

A direct and clear demand or appeal for something.