QUESTION 22

Which of the following situations for a multinational has the greatest risk exposure? [Assume each solution describes exposures of equivalent size]

	a.	Equal amounts of net outflows in two highly correlated currencies
	b.	Equal amounts of net outflows in two currencies which are slightly positively correlated
	c.	None of these situations create risk
	d.	A net inflow in one currency and a net outflow of about the same amount in another currency which are highly correlated
	e.	A net inflow in one currency and a net outflow of about the same amount in another currency which are slightly positively correlated