When the dollar strengthens, the reported consolidated earnings of U.S.-based MNCs are ____ affected by...
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When the dollar strengthens, the reported consolidated earnings of U.S.-based MNCs are ____ affected by translation exposure. When the dollar weakens, the reported consolidated earnings are ____ affected.
| a. | favorably, favorably affected but by a smaller degree |
| b. | favorably, favorably affected by a higher degree |
| c. | unfavorably, favorably affected |
| d. | favorably, unfavorably affected |
One argument for exchange rate irrelevance is that:
| a. | MNCs can hedge exchange rate exposure much more effectively than individual investors. |
| b. | investors can invest in a diversified stock portfolio of MNCs that have different exposures to exchange rates. |
| c. | purchasing power parity does not hold very well. |
| d. | MNCs are typically not diversified across numerous countries. |
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