Transaction - Fundamentals of Multinational Finance , 3e...

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Unformatted text preview: Fundamentals of Multinational Finance , 3e (Moffett) Chapter 9 1 Transactio n Exposure 9.1 Mul 1) ________ exposure deals with cash flows that result from existing contractual obligations. A) Operating B) Transaction C) Translation D) Economic Answer: B Topic: Transaction Exposure Skill: Recognition 2) ________ exposure measures the change in the present value of the firm resulting from unexpected changes in exchange rates. A) Operating B) Transaction C) Translation D) Accounting Answer: A Topic: Operating Exposure Skill: Recognition 3) Each of the following is another name for operating exposure EXCEPT ________. A) economic exposure B) strategic exposure C) accounting exposure D) competitive exposure Answer: C Topic: Accounting Exposure Skill: Recognition 4) Transacti on exposure and operating exposure exist because of unexpected changes in future cash flows. The difference between the two is that ________ exposure deals with cash flows already contracted for, while ________ exposure deals with future cash flows that might change because of changes in exchange rates. A) transaction; operating B) operating; transaction C) operating; accounting D) none of the above Answer: A Topic: Transaction and Operating Exposure Skill: Recognition 5) ________ exposure is the potential for accounting- derived changes in owner's equity to occur because of the need to translate foreign currency financial statements into a single reporting currency. A) Transaction B) Operating C) Economic D) Accounting Answer: D Topic: Accounting Exposure Skill: Recognition 6) Losses from ________ exposure generally reduce taxable income in the year they are realized. ________ exposure losses may reduce taxes over a series of years. A) accounting; Operating B) operating; Transaction C) transaction; Operating D) transaction; Accounting Answer: C Topic: Transaction and Accounting Exposure Skill: Recognition 7) Losses from ________ exposure generally reduce taxable income in the year they are realized. ________ exposure losses are not cash losses and therefore, are not tax deductible. A) transaction; Operating B) accounting; Operating C) accounting; Transaction D) transaction; Translation Answer: D Topic: Transaction and Accounting Exposure Skill: Recognition 8) MNE cash flows may be sensitive to changes in which of the following? A) exchange rates B) interest rates C) commodity prices D) all of the above Answer: D Topic: MNE Cash Flow Risk Skill: Recognition 9) ________ is a technique used by MNEs to deal with currency exposure. A) Do nothing B) Speculation C) Hedging D) All are techniques MNEs could use. Answer: D Topic: MNE Cash Flow Risk Skill: Recognition...
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Transaction - Fundamentals of Multinational Finance , 3e...

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