1. 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	$.17/1DK
British pound ()	2,000,000	1,000,000	$1.60/1

Assume that the movements in the Danish krone and the pound are highly correlated. Provide your assessment as to your firms degree of transaction exposure (as to whether the exposure is high or low). Substantiate your answer.