Question
Your employer, a large MNC, has asked you to assess its transaction exposure. Its projected cash flows are as follows for the next year: Currency
Your employer, a large MNC, has asked you to assess its transaction exposure. Its projected cash flows are as follows for the next year:
|
Currency |
Total Inflow |
Total Outflow | Current Exchange Rate in U.S. Dollars |
| Danish krone (DK) | DK50,000,000 | DK40,000,000 | $.20 |
| British pound () | 2,000,000 | 1,000,000 | $1.50 |
Assume that the movements in the Danish krone and the pound are highly negatively correlated. Provide your assessment as to your firms degree of transaction exposure (as to whether the exposure is high or low). Substantiate your answer.
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Financial Management for Public Health and Not for Profit Organizations
Authors: Steven A. Finkler, Thad Calabrese
4th edition
133060411, 132805669, 9780133060416, 978-0132805667
