Assume a two-country world: US and UK which of the following is correct about purchasing power parity (PPP) as related to these two countries? If US interest rate exceeds UK inflation rate, US currency will weaken If US interest rate exceeds UK inflation rate, US currency will strengthen. If UK inflation rate exceeds US inflation rate, US currency will weaken. If US inflation rate exceeds UK inflation rate, US currency will weaken Using the four the statements below, answer the following 3 question: the exposure of a firm's cash flows to exchange rate fluctuations. the exposure of a firm's financial statements to exchange rate fluctuation the exposure of a firm's to international contractual transactions to exchange rat fluctuation the exposure of a firm's local currency value to transactions between foreign exchange trades Transaction exposure reflects I II III IV Translation exposure reflects I II III IV Economic exposure reflects I II III IV Economic exposure reflects I II III IV Economic exposure can affect both MNCs and purely domestic firms. False Generally, MNCs with more foreign revenues than foreign costs will be affected by a foreign currency. favorably; weaker favorably; stronger not; weaker not stronger Which of the following operations benefit(s) from depreciation of the USD? investing in foreign bank accounts denominated in foreign currencies prior to depreciation of USD. borrowing in a foreign country and converting the funds to the USD prior to the depreciation purchasing foreign supplies. A and B Which of the following is not a form of exposure to exchange rate fluctuations? transaction exposure. economic exposure. culture exposure. translation exposure