A U.S.multinational corporation holds assets in Japan.Which of the following statements is most correct if the value of the Japanese yen declines relative to the dollar?
A) The assets held in Japan will be worth more when expressed in dollar terms.
B) The multinational's exchange rate exposure is determined by the assets held in Japan.
C) The multinational's exchange rate exposure is determined by its net exposed position, which is exposed assets minus exposed liabilities.
D) The multinational has no exchange rate risk because all reports are denominated in dollars.

Question

Quizplus · Accepted Answer

The multinational's exchange rate exposure is determined by its net exposed position, which is the difference between exposed assets and exposed liabilities.

A USMultinational Corporation Holds Assets in Japan