wk12_Answers for true and false questions in lecture notes

wk12_Answers for true and false questions in lecture notes...

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Chapter 10--True/False 1.The multinational corporation’s economic exposure to currency risk is made up of transaction exposure and operating exposure. (True) 2.Transaction exposure to currency risk is defined as change in financial accounting statements arising from unexpected changes in currency values. (False) 3.A benefit of leading and lagging is that it does not distort the returns earned by the various affiliates. (False) 4.Transaction exposure to currency risk is easy to hedge with currency forwards. (True) 5.Currency options are the most popular currency hedge. (False)
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Chapter 11---True/False 1. Operating exposure to currency risk is easy to hedge with currency forwards. (False) 2. In an integrated financial market, purchasing power parity holds so that equivalent assets trade for the same price regardless of where they are traded. (True) 3. The classic importer buys goods in segmented foreign markets and sells them in local markets. (False) 4. A real appreciation of the domestic currency helps importers and hurts exporters. (True) 5. Operating hedges are zero-NPV transactions. (False) 6. Real asset hedges of operating exposure to currency risk are less difficult to construct than financial market hedges. (False)
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wk12_Answers for true and false questions in lecture notes...

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