True regarding currency correlations

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Reference no: EM131859907

1. Which of the following is not a reason why translation exposure may be relevant to an MNC?

a. The prevailing exchange rates affect the expected cash flows that result from the future.

b. MNC subsidiaries may want to remit a portion of their earnings to their respective parents now.

c. Consolidated earnings are used by many investors to value MNCs.

d. All of the these choices are reasons why translation exposure may be relevant to an MNC.

2. Which of the following is not true regarding currency correlations?

a. If two inflow currencies are negatively correlated transaction exposure is somewhat offset.

b. Two highly positively correlated currencies act almost as if they are the same currency.

c. If two inflow currencies are highly positively correlated transaction exposure is somewhat offset.

d. If two currencies, one an inflow currency and the other an outflow currency, are highly positively correlated, transaction exposure is somewhat offset.

Reference no: EM131859907

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