1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
blsea [12.9K]
3 years ago
15

Diz Co. is a U.S.-based MNC with net cash inflows of euros and net cash inflows of Swiss francs. These two currencies are highly

correlated in their movements against the dollar. Yanta Co. is a U.S.-based MNC that has the same level of net cash flows in these currencies as Diz Co. except that its euros represent net cash outflows. Yanta Co has a higher exposure to exchange rate risk than Diz Co.
Required:
Which firm has a higher exposure to exchange rate risk? Why?
Business
1 answer:
VikaD [51]3 years ago
5 0

Answer:

Yanta Co. has a higher exposure to exchange rate risk than Diz Co.

The reason is that Yanta Co. does not have net inflows of euros.  Instead, its euro transactions yield net outflows.

It will always be in need of euros to settle its foreign debts or obligations, unlike Diz Co. with foreign assets.

Explanation:

a) Data and Analysis:

Diz Co. has net cash inflows of euros and net cash inflows of swiss francs

Yanta Co. has net cash outflows of euros and net cash inflows of swiss francs

b) Exposure to exchange rate risk or currency risk is the financial risk arising from fluctuations in the value of the US dollars against the Euro or Swiss Francs in which Diz Co. has some foreign assets while Yanta Co. has foreign obligations.

You might be interested in
A random sample of voters found that 180 out of 320 people were in favor of a gas tax. election results found that 36,000 people
PIT_PIT [208]
If the survey found that in every 320 people, 180 of them voted in favor of gas tax .Then to get the total number of people who voted in favor of gas tax were 36,000. We can get the number of 180 people groups among those who voted in favor. = 36,000/180 = 200 groups
A group of 180 people who voted in favor is equivalent to a group of 360 people who voted. 
Therefore, 200 × 360 people =72,000 people took part in the voting exercise.
4 0
3 years ago
Read 2 more answers
The accountant at Metlock, Inc. is figuring out the difference in income taxes the company will pay depending on the choice of e
Lisa [10]

Answer:

$339

Explanation:

Computation of the given data are as follows:

Income before tax in FIFO = $15,730

Tax rate = 30%

So, the Tax amount for FIFO = $15,730 × 30%

= $4,719

And, Income before tax in LIFO = $14,600

Tax rate = 30%

So, the Tax amount for LIFO = $14,600 × 30%

= $4,380

So, the difference in tax amount = Tax amount for FIFO  - Tax amount for LIFO

= $4,719 - $4,380

= $339

6 0
3 years ago
There are costs and benefits to either method of solving a Capitalizing Problem.<br> True or False?
Diano4ka-milaya [45]

Answer:

True.

Explanation:

3 0
2 years ago
Vanguard has an overall (composite) WACC of 10%, which reflects the cost of capital for its average asset. Its assets vary widel
Svetradugi [14.3K]

Answer:

The projects which maximize Vanguard's shareholder wealth are Project A; Project B; Project D.

Explanation:

Projects which maximize the shareholder value are projects delivering Expected Returns which are higher than its risk-adjusted weighted average cost of capital (WACC).

As a result, Project A with Expected return of 15% and risk adjusted WACC of 12%; Project B with Expected return of 12% and risk adjusted WACC of 10%; Project D with Expected return of 9% and risk adjusted WACC of 8%; are the projects that maximize the shareholder's value.

On the other hand, Project C with Expected return of 11% and risk adjusted WACC of 12% is harmful to shareholder value.

8 0
3 years ago
Mega Loan Company has very stringent credit requirements and, accordingly, has negligible losses from uncollectible accounts. Th
AfilCa [17]

Answer: The correct answer is "(A) Materiality.".

Explanation: The concept demonstrated is Materiality because by having a mechanism for preventing bad accounts through their strict requirements, they only recorded bad accounts when they actually existed, instead of making a provision.

6 0
3 years ago
Other questions:
  • An inexperienced accountant for Marigold Corp. showed the following in the income statement: income before income taxes $432,000
    6·1 answer
  • A firm evaluates all of its projects by applying the IRR rule. The current proposed project has cash flows of -$27,048, $16,850,
    9·2 answers
  • Which of the following is an example of an extent decision? Should your company implement a different bonus structure for manage
    5·1 answer
  • Pout Company reports assets with a carrying value of $420,000 (including goodwill with a carrying value of $35,000) assigned to
    5·1 answer
  • Assembly department of Zahra Technologies had 200 units as work in process at the beginning of the month. These units were 45% c
    11·1 answer
  • When most consumers and firms reduce spending only because they expect other consumers and firms to reduce spending and a recess
    6·1 answer
  • On March 7, a buyer and a seller execute a contract for the purchase of the seller's property. Closing is set for June 10. On Ap
    5·1 answer
  • Why is it important to know to know how much is in your checking account ?
    15·1 answer
  • Reddy Corporation has collected the following data for the month of June: Actual total factory overhead incurred $61,150 Budgete
    15·1 answer
  • Joe, a plumber, borrowed money from a friend who is now insisting that Joe repay the money. Joe does not have the money but has
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!