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CHAPTER 10 MEASURING AND MANAGING ECONOMIC EXPOSURE EASY 10.1 During a home currency appreciation, exporters may pull out of markets that foreign competition makes ________. a. unprofitable b. more competitive c. profitable d. more liquid ANSWER: a: foreign exchange risk and economic exposure 10.2 Economic exposure is based on the extent to which the ______ of the firm will change when exchange rates change. a. value b. current assets c. long-term liabilities d. competitive advantages ANSWER: a: foreign exchange risk and economic exposure 10.3 _______ exposure arises because currency fluctuations can alter a company’s future revenues and expenses. a. Transaction b. Operating c. Political d. Translation ANSWER: b: foreign exchange risk and economic exposure 10.4 With respect to home currency (HC) appreciation, the key issue for a domestic firm is its degree of ____. a. market share b. product differentiation c. marketing plan d. pricing flexibility ANSWER: d: operating Exposure 10.5 In the face of exchange rate volatility, developing a pricing strategy must address two key issues: a. market selection and segmentation b. market share and selection c. market share and profit margin d. market share and segmentation ANSWER: c: pricing strategy
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10.6 The _______ the price elasticity of demand, the _____ the incentive to hold down price and thereby expand sales. a. lower, greater b. lower, lower c. greater, lower d. greater, greater ANSWER: d: operating exposure 10.7 During periods of exchange rate volatility, firms dealing in _______ products face more exchange rate risk that the firms selling _________ products. a. low demand, high demand a. low supply, high supply c. undifferentiated, differentiated d. differentiated, undifferentiated ANSWER: c: operating exposure 10.8 With respect to production management of exchange risk, ________ and plant location are the principal variables that companies may change to manage the risk. a. product innovation b. product retirement c. market selection d. product sourcing ANSWER: a: product strategy 10.9 One way an MNC may improve productivity in the face of exchange rate volatility is by revising ________. a. product offerings b. the input mix c. shifting production among plants d. changing the promotional strategy ANSWER: a: product strategy 10.10 The greatest boost to a firm’s competitiveness comes from compressing the time it takes to bring new and improved products to market also known as _________.
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  • Fall '13
  • Fitbit
  • Exchange Rate, Foreign exchange market, United States dollar

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