The link between a firm\'s future operating cash flows and exchange rate fluctua

Question

The link between a firm's future operating cash flows and exchange rate fluctuations is called: (Points : 1)        asset exposure.
       operating exposure.
       a) and b).
       none of the above
Amortizing currency swaps (Points : 1)        The debt service exchanges decrease periodically through time as the hypothetical notational principal is amortized
       Incorporate an amortization feature in which periodically the amortized portions of the notational principals are re-exchanged.
       a) and b)
       None of the above

Explanation / Answer

The link between a firm's future operating cash flows and exchange rate fluctuations is called:

Solution

b)  operating exposure.

( The exchange rate changes in combination with price changes and will reduce company future operating cash flows)

Amortizing currency swaps

Solution

The debt service exchanges decrease periodically through time as the hypothetical notational principal is amortized

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