Question: Kolman Co . is a U . S . - based MNC with net cash inflows of Australian dollars and net cash inflows of Mexican
Kolman Co is a USbased MNC with net cash inflows of Australian dollars and net cash inflows of Mexican pesos. These two currencies are highly negatively correlated in their movements against the dollar. Kramer Co is a USbased MNC that has the same exposure as Kolman Co in these currencies, except that its Mexican pesos represent cash outflows. Which firm has a high exposure to exchange rate risk?
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Kolman Co
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Neither firm has any exposure.
The firms have about the same level of exposure.
Kramer Co
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