International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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Consider a US-based MNC with a wholly owned Italian subsidiary. Following a depreciation of the dollar against the euro, which of the following conclusions are correct?
Group of answer choices
a. The cash flow in euros could be altered due a change in the firm's competitive position in the marketplace.
b. A given operating cash flow in euros will be converted to a higher US dollar cash flow.
c. Both A and B
d. None of the above
Excess funds can be used for domestic or foreign short-term investments. In some instances short-term securities on the international market will have higher interest rates than domestic interest rates and will therefore be pursued by an MNC. However, what are all the possible conditions that are expected to hold and for the MNC to consider :
A) International Fisher Effect
B) Exchange Rate Forecasting results
C) Negative Effective Yield of the investment
D) Interest Rate Parity
E) Non-Diversified options for cash across currencies on the international market
1.
C, D and E
2.
A, B and D
3.
A, B and C
4.
A, B, C and D
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