1. If a US company has net cash outflows in a foreign currency, which of the following is false? (A) The US company would benefit from a drop-in value of the foreign currency. (B) The US company would benefit from an increase in value of the foreign currency. (C) The US company would suffer a loss from a decrease in value of the foreign currency. (D) The appreciation or depreciation of the foreign currency would be irrelevant. .........

2 A US firm that has cash flows in a foreign currency will have an economic GAIN if

I. the foreign currency appreciates, and the US firm has net cash inflows

II. the US firm has net cash outflows and the foreign currency depreciates

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

.......

3. The decision to exercise a call option would be based on

I. strike price

II. call premium

III. market price of the underlying security

(A) I and II

(B) II and III

(C) II only

(D) I only

................

4. Which of the following is FALSE regarding the US dollar?

(A) A strong US dollar makes domestic goods relatively more expensive than imported goods.

(B) A strong US dollar is better for a US company than a weak US dollar.

(C) A weak US dollar makes imported goods relatively cheaper than domestic goods.

(D) A weak US dollar makes domestic goods more expensive than

imported goods.

............

5. Wright International is a US firm that typically exports goods to Japan. Since the international receivables are denominated in yen, they are subject to fluctuating currency rates. To mitigate chis risk, Wright sometimes purchases put options to protect against loss from a decline in the yen. The put premium is relevant to the

I. decision to exercise the option

II. calculation of gain or loss on the exercise of the put option

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

pl explain answer