Multinational corporation Essay - FIN 3604 001 19 November 2014 Transaction Exposure Every company that operates internationally is exposed to exchange

Multinational corporation Essay - FIN 3604 001 19 November...

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FIN 3604 001 19 November 2014 Transaction Exposure Every company that operates internationally is exposed to exchange rate risk. This includes our multinational corporation which sells smart phones in India. The majority of our revenue is in the form of Indian Rupees. However, our headquarters are located in the United States, and for that reason, we need to convert our revenues back into the US Dollar. The exchange rate between the Indian Rupee and US Dollar can vary, which would affect our bottom line. There are several factors that affect the exchange rate. One would be the inflation rate in India and the United States. The current inflation rate of India is 5.52 percent as of October 2014, which is lower than it was in 2013. If the inflation rate continues to decrease, then the cost of doing business in India would decrease causing our bottom line to increase. The current inflation rate of the United States is 1.70 percent as of September 2014. We believe that the inflation rate of the United States will increase in the future. Therefore, it will be cheaper for us to operate in

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