Economic exposure can affect:
A) MNCs only.
B) purely domestic firms only.
C) A and B
D) none of the above

Question

Quizplus · Accepted Answer

Economic exposure can affect both MNCs and purely domestic firms. Economic exposure arises due to changes in exchange rates, interest rates, inflation rates, and other macroeconomic factors that can affect the value of a firm's assets, liabilities, and cash flows. These factors can impact firms, regardless of their international or domestic operations. A purely domestic firm, for example, can face economic exposure if it borrows money in a foreign currency or competes with foreign firms that benefit from a weaker currency. Similarly, an MNC can face economic exposure in its domestic market if changes in macroeconomic factors affect its profitability, cash flows or the value of its assets and liabilities.

Economic Exposure Can Affect