Chapter 12 - Operating Exposure

Please provide your discussion for the following questions on 14^th edition.

10, 11, 15, &16

10.Diversification.How can a multinational firm diversify operations? How can it diversify its financing? Do you believe these are effective ways of managing operating exposure?

11.Proactive Management. Operating exposures can be partially managed by adopting operating or financing policies that offset anticipated foreign exchange exposures. What are four of the most commonly employed proactive policies?

15.Currency Swaps. Explain how currency swaps can hedge foreign exchange operating exposure. What are the accounting advantages of currency swaps?

16.Hedging the Unhedgeable.How do some firms attempt to hedge their long-term operation exposure with contractual hedges? What assumptions do they make in order to justify contractual hedging of their operating exposure? How effective is such contractual hedging in your opinion?