A U.S.-based multinational corporation with 200,000,000 yen of net exposed assets in Japan will realize exchange rate gains if the yen appreciates in value relative to the dollar.

Question

Quizplus · Accepted Answer

If the yen appreciates in value relative to the dollar, it means that each yen can buy more dollars. This would increase the value of the corporation's net exposed assets in Japan when translated back into dollars, resulting in exchange rate gains.

A US-Based Multinational Corporation with 200,000,000 Yen of Net Exposed Assets