Q. Diz ltd. is a UK-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 ltd is a UK-based MNC that has the same level of net cash flows in these currencies as Diz ltd except that its euros represent net cash outflows. Which firm has a higher exposure to exchange rate risk? (Solved)

1. Diz ltd

2. Yanta ltd

3. the firms have about the same level of exposure.

4. neither firm has any exposure.

  • a. Diz ltd
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