QUESTION 5 Which of the following is correct as an alternative strategy that an MNC can use to eliminate transaction exposure, when a perfect hedge is not available or is too expensive? A. Leading and lagging. B. Cross - hedging. C. Currency diversification. D. All of the above. E. None of the above. QUESTION 6 Which of the following statements is not true? According to the interest rate parity, all investors from different countries should earn the same investment A. returns. B. If one country has different tax laws compared to another, interest parity may not hold. Covered interest arbitrage is always feasible when the interest rate of one country is higher than the interest OC. rate of another country. While an investor could make instant profits from locational and triangular arbitrage, the investor will be *required to wait for a certain period of time to realise profits from covered interest arbitrage. E. Both a) and c) are incorrect