Operating Exposure - Fundamentals of Multinational Finance...

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Unformatted text preview: Fundamentals of Multinational Finance , 3e (Moffett) Chapter 10 1 Operating Exposure 10.1 Multi 1) Another name for operating exposure is ________ exposure. A) economic B) competitive C) strategic D) all of the above Answer: D Topic: Operating Exposure Skill: Recognition 2) What type of international risk exposure measures the change in present value of a firm resulting from changes in future operating cash flows caused by any unexpected change in exchange rates? A) transaction exposure B) accounting exposure C) operating exposure D) translation exposure Answer: C Topic: Operating Exposure Skill: Recognition 3) The goal of operating exposure analysis is to identify strategic operating techniques the firm might adopt to enhance value in the face of unanticipated exchange rate changes. Answer: TRUE Topic: Operating Exposure Skill: Conceptual 4) ________ cash flows arise from intracompany and intercompany receivables and payments while ________ cash flows are payments for the use of loans and equity. A) Financing; operating B) Operating; financing C) Operating; accounting D) Accounting; financing Answer: B Topic: Operating and Financial Cash Flows Skill: Recognition 5) Operating cash flows may occur in different currencies and at different times, but financing cash flows may occur only in a single currency. Answer: FALSE Topic: Operating and Financial Cash Flows Skill: Recognition 6) Which of the following is NOT an example of a financial cash flow? A) parent invested equity capital B) interest on intrafirm lending C) payment for goods and services D) intrafirm principal payments Answer: C Topic: Financial Cash Flows Skill: Recognition 7) Which of the following is NOT an example of an operating cash flow? A) management fees and distributed overhead B) royalties and license fees C) rent and lease payments D) dividend paid to parent company Answer: D Topic: Operating Cash Flows Skill: Recognition 8) ________ exposure is far more important for the long- run health of a business than changes caused by ________ or ________ exposure. A) Operating; translation; transaction B) Transaction; operating; translation C) Accounting; translation; transaction D) Translation; operating; transaction Answer: A Topic: Operating; Transaction; and Translation Exposure Skill: Conceptual 9) Expected changes in foreign exchange rates should already be factored into anticipated operating results by management and investors. Answer: TRUE Topic: Expectations Skill: Conceptual 10) Under...
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This note was uploaded on 11/11/2010 for the course FIN fin351 taught by Professor C during the Spring '10 term at University of Massachusetts Boston.

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Operating Exposure - Fundamentals of Multinational Finance...

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