1. The U.S. department of Commerce estimates 1 in 5 jobs are dedicated to exporting and more and more U.S. companies are exporting, What balance sheet risks do U.S. companies face in selling their products cross-border? How do foreign sales impact a company's working capital? How can company's mitigate the balance sheet risks?

2. The U.S. one-year interest rate is 1 percent, while the Swiss one-year interest rate is 3 percent. Assume that interest rate parity exists. If a U.S. firm invests in a Swiss one-year deposit and sells Swiss francs forward with a forward contract to hedge its exchange rate exposure, the effective yield from investing in a one-year deposit in Switzerland will be about:

Select one:

a. 3 percent.

b. 2 percent.

c. 4 percent.

d. 1 percent.