Hello I need assistance answering these 2 multiple choice qu

Hello,

I need assistance answering these 2 multiple choice questions.

Questions 1 O 2. O When the U.S. dollar strengthens against other currencies, a. an MNC\'s U.S. sales will probably decrease. O b. an MNC\'s exports denominated in U.S. dollars will probably increase. O c. an MNC\'s interest owed on foreign funds borrowed will probably increase. O d. an MNC\'s exports denominated in foreign currencies will probably increase. 4. e. all of the above

Solution

1. Option d is correct option because when US dollar strengthen then foreign currency will be cheaper So the exports denominated in foreign currency will increase because lower value of exports will make it more competitive. It will be just the reverse for US exports. Exchange rate has effect on foreign interest rate and domestic sales.

2. Option c is correct option because the more transaction with foreign currency the more sensitive it becomes. By hedging and reducing dollar exposure to foreign currency it has insulated the company from foreign currency fluctuation

Best of Luck. God Bless