1,Assume that your firm is an importer of Mexican chairs denominated in pesos. Your competition is mainly U.S. producers of chairs. You wish to assess the relationship between the percentage change in its stock price (SP_t) and the percentage change in the peso's value relative to the dollar (PESO_t). SP_tis the dependent variable. You apply the regression model to an earlier subperiod and a more recent subperiod. In the recent subperiod, you increased your importing volume. You should expect that the regression coefficient in the PESO_tvariable would be ____ in the first subperiod and ____ in the second subperiod.

a, negative; positive

b, positive; positive

c, positive; negative

d, negative; negative

2, ABCDiz Co. is a U.S.-based MNC with net cash inflows of 2 currencies: British Pound and the Singapore Dollar. Both currencies move in same direction against the dollar. XYZ Yanta Co. is a also a U.S.-based MNC that has the same level of net cash flows in both BP and Singapore dollar except that it has net cash outflows in BP. Which firm has a higher exposure to exchange rate risk?

a, ABC Co.

b, XYZ Co.

c, Both ABC and XYZ have same level of exposure.

d, Cannot be determined given the above information.