For each question state True or False and briefly explain why. 1. Given the strengthening of the USD in recent months, MNCs with USD payables in Dec 2022 should hedge their transaction exposure while MNCs with USD receivables don't need to hedge. 2. One way for an MNC to manage economic exposure is to restructure its operations, i.e., to shift the sources of revenues and/or costs to have a better match in foreign currency cash inflows and outflows, thus providing a natural hedge. 3. Although a domestic company with no international business doesn't face transaction or translation exposure, it may still incur economic exposure caused by the exchange rate volatility. 4. Multinational capital budgeting may generate different results depending on whether it is viewed from the parent's perspective or the subsidiary's perspective. 5. The matching strategy to reduce exchange rate risk for an MNC with a foreign subsidiary is especially desirable when the foreign subsidiary is based in a country where interest rates are relatively low. 6. The relationship between an MNC's cost of capital and its debt to total capital ratio can be represented by a U-shaped curve. 7. An MNC may not be able to borrow in a currency that matches its invoice currency. Thus, to mitigate the currency exposure, the MNC can use a parallel loan. 8. An MNC must decide whether to obtain a loan with a maturity that perfectly fits its needs or one with a shorter maturity if it has a more favourable interest rate and then additional financing when this loan matures. 9. Regardless of the relationship between forward and future spot exchange rates, if the (covered) interest rate parity (IRP) holds, uncovered foreign financing will result in financing costs similar to those incurred in domestic financing. 10. If the exporter needs funds immediately, it may obtain financing from a bank, secured by the account receivables. For each question state True or False and briefly explain why. 1. Given the strengthening of the USD in recent months, MNCs with USD payables in Dec 2022 should hedge their transaction exposure while MNCs with USD receivables don't need to hedge. 2. One way for an MNC to manage economic exposure is to restructure its operations, i.e., to shift the sources of revenues and/or costs to have a better match in foreign currency cash inflows and outflows, thus providing a natural hedge. 3. Although a domestic company with no international business doesn't face transaction or translation exposure, it may still incur economic exposure caused by the exchange rate volatility. 4. Multinational capital budgeting may generate different results depending on whether it is viewed from the parent's perspective or the subsidiary's perspective. 5. The matching strategy to reduce exchange rate risk for an MNC with a foreign subsidiary is especially desirable when the foreign subsidiary is based in a country where interest rates are relatively low. 6. The relationship between an MNC's cost of capital and its debt to total capital ratio can be represented by a U-shaped curve. 7. An MNC may not be able to borrow in a currency that matches its invoice currency. Thus, to mitigate the currency exposure, the MNC can use a parallel loan. 8. An MNC must decide whether to obtain a loan with a maturity that perfectly fits its needs or one with a shorter maturity if it has a more favourable interest rate and then additional financing when this loan matures. 9. Regardless of the relationship between forward and future spot exchange rates, if the (covered) interest rate parity (IRP) holds, uncovered foreign financing will result in financing costs similar to those incurred in domestic financing. 10. If the exporter needs funds immediately, it may obtain financing from a bank, secured by the account receivables