Kizspy | Question: 24
(Choose 1 answer)
Consider a U.S.-based MNC with manufacturing activities in Japan. The result of a change in the ¥-S exchange
rate on the assets and liabilities of the consolidated balance sheet is:
Exposed assets
¥700,000,000
Exposed liabilities ¥ 500,000,000
Ignoring transaction exposure in the yen, the translation exposure will indicate a possible need for a
"derivatives hedge" of
A. short position in ¥200,000,000 currency futures.
B. long position in ¥200,000,000 currency futures.
C. either short position in ¥200,000,000 currency futures or long position in ¥200,000,000 currency futures.
D. none of the options
