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Eun & Resnick 4e CHAPTER 9 Management of Economic Exposure How to Measure Economic Exposure world(prenominal) finance in Practice: U.S. Firms Feel the Pain of pesos Plunge in operation(p) Exposure: Definition Illustration of Operating Exposure Determinants of Operating Exposure Managing Operating Exposure Selecting Low-Cost Production Sites International Finance in Practice: The Strong Yen and Toyotas Choice Flexible Sourcing Policy diversification of the Market R&D Efforts and Product Differentiation Financial Hedging International Finance in Practice: Porsche Powers Profit with Currency Plays fount exertion: Ex change over Risk Management at Merck Summary MINI CASE: Economic Exposure of Albion Computers PLC How to Measure Economic Exposure 1. Suppose the U.S. long horse substantially depreciates against the Japanese yen. The change in exchange rate a) keep use up a significant economic consequences for U.S. firms. b) Can invite a significant economic consequences for Japanese firms. c) Can have a significant economic consequences for both U.S. and Japanese firms. d) none of the above Answer: c) 2. Suppose the U.S. dollar substantially depreciates against the Japanese yen.

The change in exchange rate a) Will tend to weaken the combative position of import-competing U.S. car makers. b) Will tend to strengthen the combative position of import-competing U.S. car makers. c) Will tend to strengthen the agonistical position of Japanese car makers at the expense of U.S. makers. d) no(prenominal) of the above Answer: b) 3. When the Mexican peso collapsed in 1994, declining by 37 percent, a) U.S. firms that exported to Mexico and priced in peso were adversely affected. b) U.S. firms that exported to Mexico and priced in dollars were adversely affected. c) U.S. firms were unaffected(p) by the peso collapse, since Mexico is such a small market. d) some(prenominal) a) and b) Answer: d) Rationale: a) is obvious, the dollar... If you want to get a broad essay, order it on our website: Orderessay

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