Changes in the spot rates can: a. affect a firm's present value of future cash flows,...

Changes in the spot rates can:

a. affect a firm's present value of future cash flows, posing economic risk.

b. impose translation risk on a firm.

c. impose accounting risk on a firm.

d. affect the value of a company's future cash transactions, posing transaction risk.

Solutions

Expert Solution

Solution: affect the value of a company's future cash transactions, posing transaction risk.

Explanation: Transaction exposure occurs when the future cash flows of the company are affected by changes in the spot rates

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

The price of a security is the…?A the present value of all future cash flows....

The price of a security is the…?A the present value of all future cash flows.B sum of all future profits.C the future value of all the future profits net of interest payments and taxes.D the future value of all current dividends. geometric average of all past prices.

Explain how the practice of calculating the present value of expected future cash flows can assist...

Explain how the practice of calculating the present value of expected future cash flows can assist you in your next salary negotiation; or perhaps discuss how you would use (in the future or have used in the past) NPV calculations of future personal income earning potential when evaluating the decision to pursue an advanced academic degree.

The present value of an annuity is the sum of the discounted value of all future cash flows.

Present value of annuities and annuity paymentsThe present value of an annuity is the sum of the discounted value of all future cash flows.You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatest present value (PV)? Assume that all annuities earn the same positive interest rate.An annuity that pays $500 at the end of every six monthsAn annuity that pays $1,000 at the beginning of each yearAn annuity that pays $500 at...

Find the present value of the following stream of cash flows, assuming that the firm's opportunity...

Find the present value of the following stream of cash flows, assuming that the firm's opportunity cost is 12 percent. What would be the future value of those cash flows? Year Amount 1 $10,000 2 35,000 3 24,000 4 53,000

Project A has a total present value of future cash flows of $98,200 and a cost...

Project A has a total present value of future cash flows of $98,200 and a cost of $102,000. Project B has a total present value of future cash flows of $386,911 and a cost of $287,211. Project C has a total present value of future cash flows of $784,000 and a cost of $668,000. Project D has a total present value of future cash flows of $119,865 and a cost of $98,770. Which of these projects has the highest Profitability...

An investment costs $200,000. If the present value (PV) of all the future cash flows is...

An investment costs $200,000. If the present value (PV) of all the future cash flows is $175,000, which of the following statements is correct? a. The project should be rejected since the Profitability Index is less than 1. b. The project should be rejected since the NPV is $25,000. c. The project should be accepted since the Profitability Index is greater than 0 d. The project should be rejected since the NPV is -$175,000.

CMA Ltd currently has an enterprise value (that is, present value of future free cash flows)...

CMA Ltd currently has an enterprise value (that is, present value of future free cash flows) of $400 million and $100 million in excess cash. The firm has 10 million shares outstanding and no debt. Suppose CMA uses its excess cash to repurchase shares. In the near future there news is scheduled to come out that will change AMC's enterprise value to either $600 million or $200 million. Suppose CMA management expects good news to come out. If management’s goal...

Present and Future Values of Single Cash Flows for Different Interest Rates Use both the TVM...

Present and Future Values of Single Cash Flows for Different Interest Rates Use both the TVM equations and a financial calculator to find the following values. Round your answers to the nearest cent. (Hint: Using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the...

Present and Future Values of Single Cash Flows for Different Interest Rates Use both the TVM...

Present and Future Values of Single Cash Flows for Different Interest Rates Use both the TVM equations and a financial calculator to find the following values. (Hint: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown...

Earning quality is defined as how well firm's earnings represent future cash flows. Several factors affect...

Earning quality is defined as how well firm's earnings represent future cash flows. Several factors affect earnings quality. Which statement is NOT TRUE ? Group of answer choices Accounting users should assess the quality of a company's earnings because reported accounting earnings number is not exactly equal to economic earnings. Current cash flow is a better proxy for future cash flows than current earnings Earnings quality can be defined as the degree of correlation between accounting earnings and its economic...

Subjects