One argument for exchange rate irrelevance is that:
A) MNCs can hedge exchange rate exposure much more effectively than individual investors.
B) diversified stakeholders will not be affected by exchange rate movements because of offsetting effects.
C) purchasing power parity does not hold very well.
D) MNCs are typically not diversified across numerous countries.

Question

Quizplus · Accepted Answer

Diversified stakeholders may experience offsetting effects from exchange rate movements, making the exchange rate less relevant to them.

One Argument for Exchange Rate Irrelevance Is That