Assume that the British pound and Swiss franc are highly correlated. A U.S. firm anticipates the equivalent of $1 million cash outflows in francs and the equivalent of $1 million cash outflows in pounds. During a ____ cycle, the firm is ____ affected by its exposure.
A) strong dollar; favorably
B) weak dollar; not
C) strong dollar; not
D) weak dollar; favorably

Question

​Assume that the British pound and Swiss franc are highly correlated. A U.S. firm anticipates the equivalent of $1 million cash outflows in francs and the equivalent of $1 million cash outflows in pounds. During a ____ cycle, the firm is ____ affected by its exposure.
A) ​strong dollar; favorably
B) ​weak dollar; not
C) ​strong dollar; not
D) ​weak dollar; favorably

Quizplus · Accepted Answer

During a strong dollar cycle, the value of foreign currencies like the British pound and Swiss franc decreases relative to the dollar. This means the firm would need fewer dollars to meet its obligations in these currencies, thus being favorably affected by its exposure.

​Assume That the British Pound and Swiss Franc Are Highly

Assume That the British Pound and Swiss Franc Are Highly