One argument for the irrelevance of exchange rate risk is th

One argument for the irrelevance of exchange rate risk is that: O a. MNCs are not normally subject to economic exposure. O b. individuals can invest in a diversified set of MNCs, and can take positions in aurmendies on their ownt chnge rae esposure of MINC c. MNCS are not normally subject to transaction exposure d. MNCs can easily hedge their economic exposure.

Solution

One argument for the irrelevance of exchange rate risk is that

ANSWER : b. individuals can invest in a diversified set of MNCs, and can take positions in currencies on their own to offset any exchange rate exposure of MNCs.

EXPLANATION : Investors who invest in MNCs can hedge exchange rate risk on their own.

If investors believe that their investments in US-based MNCs would be adversely affected when foreign currencies depreciate/weaken against the dollar, they could take their own positions in currency derivatives that would increase in value if foreign currencies weaken against the dollar. Thus if investors can hedge the exposure of their investments to exchange rate risk on their own, the MNCs may not need to worry about exchange rate risk.

so thats, why this is the asnwer chosen