Example of financial operating assumption

Assignment Help Financial Management

Reference no: EM132037126

1. Chaoyi Co. is a U.S. company that has exposure to the Swiss francs (SF) and Danish kroner (DK). It has net inflows of SF200 million and net outflows of DK500 million. The present exchange rate of the SF is about $.40 while the present exchange rate of the DK is $.10. Chaoyi Co. has not hedged these positions. The SF and DK are highly correlated in their movements against the dollar. If the dollar weakens, then Chaoyi Co. will:

A) Benefit, because the dollar value of its SF position exceeds the dollar value of its DK position.

B) Benefit, because the dollar value of its DK position exceeds the dollar value of its SF position.

C) Be adversely affected, because the dollar value of its SF position exceeds the dollar value of its DK position.

D) Be adversely affected, because the dollar value of its DK position exceeds the dollar value of its SF position.

2. Which one of the following is NOT the example of financial operating assumption?

Projected balance sheets

Projected additional financing needed

Projected income statements

Projected customers expectations

Reference no: EM132037126

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