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Fundamentals of Financial Management
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Chapter 18 / Exercise 1A
Fundamentals of Financial Management
Brigham
Expert Verified
International Financial Management, 8e(Eun)Chapter 8 Management of Transaction Exposure1) Transaction exposure is defined asA) the sensitivity of realized domestic currency values of the firm's contractual cash flows denominated in foreign currencies to unexpected exchange rate changes.B) the extent to which the value of the firm would be affected by unanticipated changes in exchange rate.C) the potential that the firm's consolidated financial statement can be affected by changes in exchange rates.D) ex post and ex ante currency exposures.Answer:
ATopic: Three Types of ExposureAccessibility: Keyboard Navigation2) The most direct and popular way of hedging transaction exposure is by
BTopic: Three Types of ExposureAccessibility: Keyboard Navigation3) If you have a long position in a foreign currency, you can hedge with
BTopic: Three Types of ExposureAccessibility: Keyboard Navigation4) If you owe a foreign currency denominated debt, you can hedge with
DTopic: Three Types of ExposureAccessibility: Keyboard Navigation5) If you own a foreign currency denominated bond, you can hedge withA) a long position in a currency forward contract.
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Fundamentals of Financial Management
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Chapter 18 / Exercise 1A
Fundamentals of Financial Management
Brigham
Expert Verified
B) a long position in an exchange-traded futures option.C) buying the foreign currency today and investing it in the foreign county.D) a swap contract where pay the cash flows of the bond in exchange for dollars.Answer:
DTopic: Three Types of ExposureAccessibility: Keyboard Navigation6) The sensitivity of "realized" domestic currency values of the firm's contractual cash flows denominatedin foreign currency to unexpected changes in the exchange rate is
ATopic: Three Types of ExposureAccessibility: Keyboard Navigation

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