4. Answer: of the following reflects a hedge of future receivables invoiced in GBP by a U.S. firm? A) Purchase B) Purchase GBP forward. C) Borrow GBP, convert these funds to USD, invest these in USD assets with same maturity as a currency call option in GBP. the receivables. D) Both (A) and (B) but not (C). E) None of the above. 5. Answer: Which of the following reflects a hedge of future payables invoiced in GBP by & U.S. firm? A) Purchase a currency call option in GBP B) Purchase GBP forward. C) Borrow USD, convert these funds to GBP, invest these in GBP assets with same maturity as the payables. D) All of the above. 6. Answer: Generally, MNCs with lower foreign costs than foreign revenues will be impacted by a foreign currency A) Favorably; stronger B) Adversely; stronger C) Favorably; weaker D) Adversely; weaker E) Both (B) and (C). F) Both (A) and (D) 7. Answer: A domestic firm produces goods which compete in both the domestic and foreign markets wit foreign produced substitutes. Appreciation of the domestic currency will likely: A) Increase B) Increase the firm's foreign sales. C) Increase the firm's cash outflows for foreign raw materials invoiced in foreign currencies. D) Increase net returns earned on the firm's foreign bank deposits. E) none of the above. the firm's domestic sales by reducing the competitiveness of foreign substitutes