Which of the following is the least effective way of hedging transaction exposure in the long run?

Related MCQs

• Which of the following is the least effective way of hedging transaction exposure in the long run?
• With regard to hedging translation exposure, translation losses _______; and gains on forward contracts used to hedge translation exposure _______.
• As opposed to transaction exposure, managing economic exposure involves developing a ________ solution.
• Multinational firms face exposure to many different types of international risk. Which of the following is not a type of exposure?
• An effective way for an MNC to assess its economic exposure is to look at the firm's:
• Assume zero transaction costs. If the 90-day forward rate of the euro is an accurate estimate of the spot rate 90 days from now, then the real cost of hedging payables will be:
• Assume zero transaction costs. If the 90-day forward rate of the euro is an accurate estimate of the spot rate 90 days from now, then the real cost of hedging payables will be:
• If an MNC expects cash inflows of equal amounts in two currencies, and the two currencies are ___________ correlated, the MNC's transaction exposure is relatively ___________.
• Kalons ltd. is a UK-based MNC that frequently imports raw materials from Canada. Kalons is typically invoiced for these goods in Canadian dollars and is concerned that the Canadian dollar will appreciate in the near future. Which of the following is not an appropriate hedging technique under these circumstances?
• Assume that Kramer Co. will receive SF 800,000 in 90 days. Today's spot rate of the Swiss franc is £0.42, and the 90-day forward rate is £0.425. Kramer has developed the following probability distribution for the spot rate in 90 days: Possible Spot Rate in 90 Days Probability £0.41 10% £0.42 20% £0.43 40% £0.44 30% The probability that the forward hedge will result in more dollars received than not hedging is: