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creativ13 [48]
1 year ago
11

Which of the following statements make the best argument for why firms should NOT hedge exchange rate risks? Exchange rate risk

is irrelevant for multinational companies (MNCs) because an MNC generates cash flows in numerous currencies. The exchange rate movements of many currencies can easily, exactly offset each other. Exchange rate risk is irrelevant because many multinational companies are similarly affected by exchange rate movements. Exchange rate risk is irrelevant because investors can hedge exchange rate risk on their own. Exchange rate risk is irrelevant because stakeholders do not care about the financial distress risk that adverse effects of exchange rate movements may cause. Exchange rate risk is irrelevant because it is extremely difficult to hedge exchange risks profitably,
Business
1 answer:
nirvana33 [79]1 year ago
6 0

The statement that gives the best argument for the concern of exchange rate risks is that Exchange rate risk is irrelevant because investors can hedge exchange rate risk on their own, which means that option C should be the right answer.

Exchange rate risk refers to the risk of financial impact that occurs due to exchange rate fluctuations. The minor changes in exchange rates also have a substantial influence on the operations and profitability of the firms. It is because if a company operates on others countries denomination, any changes may risk its financial transactions in another currency. The exchange rate risk generally protects its profits from the market volatility. Businesses involved in overseas trade are the most affected by such fluctuations. The market forces of supply and demand affects foreign exchange.

Learn more about exchange rate risk at:

brainly.com/question/28009208

#SPJ4

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I will mark you as brainliest!
Shalnov [3]

Answer:

A. Product and Promotion development

Explanation:

8 0
3 years ago
Andrea invests $5,000 in five Epic Electronics bonds that mature in 10 years. Unexpectedly just the week after she invests, she
VladimirAG [237]

Answer:

The answer is option C. She may immediately sell the bonds but it is unclear how much money they will sell for.

Explanation:

She may immediately sell the bonds but it is unclear how much money they will sell for.

Investors who hold onto their bonds until maturity are assured of to receive the face value of the bond. In our case, if Andrea would have chosen to hold her $5,000  bond investment for 10 years, she would have been assured the  bonds face value, however since she prefers to use the cash to work abroad, she can sell the bonds immediately.

Selling a bond before it's maturity date can either be beneficial or detrimental. This depends on the value of the bond at the time of sale. If at the time of sale the bond would have gained value, then the bond will sell at a higher price than when it was bought. On the other hand, if the bond at the time of sale has lost value, then the bond will sell at a lower price than the price which it was bought.

In our case, the best option for Andrea would be to sell the bonds immediately, since she really needs the cash. If it happens that at the point at which she sells the bonds they will have gained value, then she will have more than $5,000 cash, however, if at the point she decides to sell the bonds they will have lost value, then she will have less than $5,000 depending on how much value was lost from the time she bought the bonds and the time she sold the bonds.

4 0
3 years ago
Which of the following is true of the assumption of risks during delivery of goods?
kirza4 [7]
One of the true assumption of risks during delivery of goods is : The seller is liable for any damages incurred to the goods during shipment.

That's why most of the companies whose business including goods delivery always put an insurance for on board products, to prevent the company from any potential damage during the shipment<span />
3 0
3 years ago
Jesse designs web sites and uses job order costing. On September 1, Jesse’s Work in Process account had a beginning balance of $
Elena L [17]

Answer:

Work in Process Inventory account at the end of September is $1,950

Explanation:

As all jobs at the beginning of september in the balance of Work in progress were finished, it's costs are now in Finished Goods Inventory. So are too, the two jobs started and finished during September. The Works in Process account records materials, labor and structure costs of order not finished yet at the end of the month.

At the end of september only Job 850 is not finished. The sum of materials, direct labor and overhed that is $1.950, is the balance of Work in Process Inventory account at the end of September.

5 0
3 years ago
Mr. Eli Lilly is very excited because sales for his nursery and Plant Company are expected to double from $600,000 to $1,200,000
liq [111]

Answer:

The correct answer is Cash deficit = ($804,000) and incorrect.

Explanation:

According to the scenario, the calculation can be done as follows:

Cash Flow Statement

Beginning cash   =                                                    $1,200,000  

Now we less the asset buildup, then

Less: Assets buildup (1200000-600000)*50%  =  -$300,000

Now by adding the profit, then

Add: Profit (1200000*8%) =                                     $96,000

Cash deficit =                                                          ($804,000)

As his earning seems unable to cover additional capital expenditure, his optimistic outlook for his cash position appear to be incorrect.

8 0
3 years ago
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