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Final Exam Sample Questions for MCQs

Final Exam Sample Questions for MCQs - Final Exam Sample...

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Final Exam Sample Questions for MCQs CH 10 1. Geographically diversified operations provide a natural hedge of transaction exposure to currency risk because ____. a. operating costs in one country are unlikely to be related to costs in another country b. it is easy to replace sales in one country with sales from another country * c. when one currency is depreciating, another currency must be appreciating d. Two of the above e. None of the above 2. The corporate treasury should charge ____ for hedging the currency risk exposures of individual business units within the firm. a. historical cost prices c. reservation prices * b. market prices d. the same price regardless of when the transactions are executed e. the most that the division can afford 3. Market prices allow the treasury to ____. * 4. The preferred way to hedge transaction exposure to currency risk is ____. * 5. The most popular instrument for hedging currency risk is a ____. * 6. A “disaster hedge” against adverse currency movements can be obtained with a ____. a. currency forward b. currency future c. money market hedge * d. currency option e. currency swap 1
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CH 11 1. Change in the value of future cash flows due to unexpected changes in exchange rates is called ____ to currency risk. *
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