1. An MNC has the following net exposures to the euro and the British pound: a net inflow of 24million British pounds and a net outflow of 26.4 million euros. The spot current spot rates are $2500/ and $1.1364/. If the pound and euro are perfectly positively correlated in their movement against the U.S. dollar, will the company have high or low exposure to foreign exchange? Explain why either way.

If the net values were both net inflows and they perfectly positively correlated. Would the MNC have a high or a low level of exposure to foreign exchange? Explain