Questions from Multinational Business Finance


Q: Lawful expropriation must be accompanied by lawful compensation. What criteria have

Lawful expropriation must be accompanied by lawful compensation. What criteria have to be met to fulfill this requirement?

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Q: What are the four main contractual instruments used to hedge transaction exposure

What are the four main contractual instruments used to hedge transaction exposure?

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Q: How does a money market hedge differ for an account receivable versus

How does a money market hedge differ for an account receivable versus that of an account payable? Is it really a meaningful difference?

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Q: What is the difference between a balance sheet hedge, a financing

What is the difference between a balance sheet hedge, a financing hedge, and a money market hedge?

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Q: Theoretically, shouldn't forward contract hedges and money market hedges have the

Theoretically, shouldn't forward contract hedges and money market hedges have the same identical outcome? Don't they both use the same three specific inputs – the initial spot rate, the domestic cost...

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Q: Why do many firms object to paying for foreign currency option hedges

Why do many firms object to paying for foreign currency option hedges? Do firms pay for forward contract hedges? How do forwards and options differ if at all?

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Q: Ultimately, a treasurer must choose among alternative strategies to manage transaction

Ultimately, a treasurer must choose among alternative strategies to manage transaction exposure. Explain the two main decision criteria that must be used.

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Q: Which of the three currency exposures relate to cash flows already contracted

Which of the three currency exposures relate to cash flows already contracted for, and which of the exposures do not?

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Q: Define currency risk.

Define currency risk.

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Q: What is a hedge? How does that differ from speculation?

What is a hedge? How does that differ from speculation?

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