A European MNC has the equivalent of 1 million euro cash outflows in each of two highly negatively correlated currencies. During ____ euro cycles, cash outflows are ____.

Question

Quizplus · Accepted Answer

The correct answer is A because the cash outflows are in two highly negatively correlated currencies, which means that when one currency is strong, the other is weak. This will result in weak euro cycles, which will be somewhat stable because the negative correlation will help to offset the impact of fluctuations in either currency.

A European MNC Has the Equivalent of 1 Million Euro