End-of-Chapter 10 Problems

End-of-Chapter 10 Problems - Moore School of Business...

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1 Moore School of Business Spring 2012 University of South Carolina IBUS 401 – INTERNATIONAL FINANCIAL MANAGEMENT Answers to selected end-of-chapters problems Chapter 10 Measuring Exposure to Exchange Rate Fluctuations Problems assigned: 1, 2, 3, 4, 6, 8, 10, 21, 22, 36 1. Transaction exposure is due only to international transactions by a firm. Economic exposure includes any form by which the firm’s cash flow will be affected. Foreign competition may increase due to currency fluctuations. This could affect the firm’s cash flow, but did not affect the value of any ongoing transactions. Thus, it represents a form of economic exposure but not transaction exposure. Transaction exposure is a subset of economic exposure. Consideration of all cash flows in a particular currency is not necessary when some inflows and outflows offset each other. Only net cash flows are necessary. 2. Solved in class.
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This note was uploaded on 03/20/2012 for the course IBUS 401 taught by Professor Mr.guedhami during the Spring '12 term at South Carolina.

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End-of-Chapter 10 Problems - Moore School of Business...

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