Question

Suppose a u.s. firm builds a factory in china, staffs it with chinese workers, uses materials supplied by chinese companies, and finances the entire operation with a loan from a chinese bank located in the same town as the factory. this firm is most likely trying to greatly reduce, or eliminate, which one of the following?

Answer 1

Had to look for the options and here is my answer. Given that a U.S firm establishes a factory in China, the Chinese workers utilizes materials that are being provided by Chinese companies and provides aid with the entire operation. Therefore, this firm would most likely try to decrease or remove LONG-RUN EXPOSURE TO EXCHANGE RISK.