1. In theory, shareholders could diversify the currency risk from investing in a multinational company that doesnt hedge its currency risk.

Group of answer choices

True

False

2. Firms can theoretically hedge its operating exposure by either diversifying operations or diversifying financing.

Group of answer choices

True

False

3. Cross-currency swaps can hedge operating exposure, but back-to-back loans cannot.

Group of answer choices

True

False

4. Under a worldwide tax system, income is taxed only at the tax rate of the country where profits are earned.

Group of answer choices

True

False

5. The tax reform recently passed in the United States eliminates the incentive for companies to use transfer pricing aggressively, i.e., recognize higher profits in lower-tax countries.

Group of answer choices

True

False