Question 1

A 100% domestic U.S. company will have

Answers:

Neither transaction exposure nor economic exposure

Both transaction exposure and economic exposure

Transaction exposure but no economic exposure

No transaction exposure but could have economic exposure

Question 2

Economic exposure is also known as

Answers:

Operating exposure

Strategic exposure

Comparative exposure

All of the above

A and b only

Question 3

Some have argued that exchange rate risk is irrelevant. Which of the following is not an argument for exchange rate irrelevance?

Answers:

Investor hedge argument

Interest rate party argumen

Currency diversification argument.

Shareholder diversification argument

All OT the above are arguments tor irrele

Question 4

A call option on the euro with a strike price of $1 2260/E is currently priced at (i.e. premium is) $0.0450/E. The current spot rate is $1.2060/E. The time value of the call is:

Answers:

-50.0200/E

50.0200/E

-$0.0650/E

50.0250/E

50.0450/E