A company can have exchange rate exposure
A) even if it does not have foreign holdings.
B) only if it has foreign holdings.
C) under a fixed exchange rate regime and not under a flexible exchange rate regime.
D) none of these choices.
A
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In 2015, some banks in Europe had to make interest payments to borrowers rather than receive interest payments from borrowers. Which of the following statements describes this situation?
A) For these banks, the loans increased required reserves. B) For these banks, the loans were liabilities instead of assets. C) These banks were receiving negative nominal interest rates on these loans. D) All of the above are correct.
Refer to Figure 7-2. If the tariff was replaced by a quota which limited coffee imports to 20 million pounds, the amount of revenue received by coffee importers would equal
A) $5 million. B) $15 million. C) $50 million. D) $78 million.
According to rational expectations
A) expectations of inflation are viewed as being an average of past inflation rates. B) expectations of inflation are viewed as being an average of expected future inflation rates. C) expectations formation indicates that changes in expectations occur slowly over time as past data change. D) expectations will not differ from optimal forecasts using all available information.
In addition to being subject to the Fed's reserve requirements, the banks are also required to maintain a capital requirement, which is
A) the ratio of its deposits to its reserves. B) the ratio of its loans to its reserves. C) the ratio of its total assets to its total liabilities. D) the ratio of its equity to its total assets.