Question
1. If Company A (a U.S. firm) has a 7 million receivable and a 15 million payable both maturing in 1 year, determine the companys
1. If Company A (a U.S. firm) has a 7 million receivable and a 15 million payable both maturing in 1 year, determine the companys net exposure in the foreign exchange market.
Question 1 options:
| Company A has a net exposure of 8 million payable. |
| Company A has no exposure because the exchange rate between euro and dollar is fixed. |
| Company A has a net exposure of 22 million. |
| Company A has a net exposure of 8 million receivable. |
2. TRUE OR FALSE - a purely domestic firm that sources and sells only domestically does not face economic exposure at all because both the costs and earnings are in local currency. A. True B. False
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