1. Company JKL is a U.S. multinational company with subsidiaries around the world. The company has the accumulated the following accounts receivable and accounts payable information from their subsidiaries by currency:

Currency Accounts Receivable Accounts Payable Spot Rate

Japanese Yen 1,250,000,000 750,000,000 126 yen per US Dollar

Euro 7,500,000 10,000,000 $1.15 per Euro

Great Britain Pound 10,000,000 15,000,000 $1.36 per Great Britain Pound

a. What type(s) of exposure is JKL exposed to?

b. What is the dollar amount of exposure to each currency, and what type of exposure is this?

c. Assuming that the cash will be received from accounts receivable in three months, and that the payables will be paid in three months, what would happen to JKL if the Great Britain pound appreciated by 10% from the spot rate of $1.36 per pound?

d. How could JKL manage this exposure risk?