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The following regression model was run by a U.S.-based MNC to determine its degree of economic exposure as it relates to the Canadian dollar and
The following regression model was run by a U.S.-based MNC to determine its degree of economic exposure as it relates to the Canadian dollar and Mexican Peso: PCFt = a0 + a1et + mt where PCFt is the percentage change in inflation-adjusted cash flows measured in the firm's home currency over period t, and et is the % change in the exchange rate of the currency over period t. The regression was run over two subperiods for each of the two currencies and the firm obtained the following results: Regression Coefficient (a1) Regression Coefficient (a1) Currency Earlier Subperiod Recent Subperiod Canadian dollar (C$) -.60 .11 Mexican Peso .18 1.24 Based on the above regression results, which of the following statements is probably not true? Group of answer choices The MNC was more sensitive to movements in the Canadian dollar than in the Peso in the earlier subperiod. The MNC was more sensitive to movements in the Peso than in the Canadian dollar in the more recent subperiod. The MNC probably had more inflows than outflows denominated in Peso in the more recent subperiod. The MNC probably had more outflows than inflows in Canadian dollars in the earlier
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