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QUESTION Firm AA3 is an exporting business which obtains its supples and borrows funds in the home market. Firm BB5 sells product in the home

QUESTION

Firm AA3 is an exporting business which obtains its supples and borrows funds in the home market. Firm BB5 sells product in the home market and has little foreign competition. Firm BB5 obtains their supplies and borrows funds from overseas markets. An appreciation of the home currency will likely result in:

a.

A cashflow decrease for both companies
b.

AA3s cashflows going down while BB5s cashflows improve
c.

None of the other answers are correct
d.

AA3s cashflows improving & BB5s cashflows going down
e.

Cashflow improvement for both firms

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