9. The approach argues that equilibrium exchange rates are achieved when the net inflow of foreign exchange arising from current account activities is equal to the net outflow of foreign exchange arising from financial account activities. a) balance of payments b) monetary c) asset market d) law of one price e) none of the above 10. If the European subsidiary of a U.S. firm has net exposed assets of 750,000, and the euro drops in value from $1.30/euro to $1.20/ the U.S. firm has a translation: A) gain of $75,000 B) loss of $75,000 C) gain of $625,000. D) loss of 576,923. exists continuously and a firm is free to adjust its prices and costs to 11. If maintain its expected competitive position, its operating exposure may be a) disequilibrium; near zero b) equilibrium; near zero c) equilibrium; quite high d) All of the above e) None of the above 12. Which of the following is NOT an example of a form of political risk that might be avoided or reduced by foreign exchange risk management? A) expropriation of assets B) destruction of raw materials through natural disaster C) war D) unfavorable legal changes E) none of the above Sell pounds in six months e) Do nothing ency futures contrac pound currency futures contrac