Part II. True/False. (20 Points) 1. Exposure illustrates the problem of inefficiency. 2. Exposure can be defined in three parts: Equilibrium, Expectation and Cash. 3. Economic Exposure is another term for International Exposure. TRUE| 4. Transaction Exposure is due to the lag time between the quoted spot FX price and the settlement price. 5. Hedging isa form of management for Transaction Exposure. 6. A hedge instrument can reduce the probability of a transaction exposure. 7. Translation Exposure is created by the differences in foreign currencies for hom and foreign subsidiaries. 8. One way Translation Exposure can be managed is thru a cross currency swap. 9. Translation Exposure is an accounting problem. 10. Transaction Exposure + Translation Exposure = Market Equilibrium 11. Economic Exposure is a result of a MNEs expected cash flow. 12. Economic Exposure can be measured in a medium run equilibrium and disequilibrium. 13. One way to measure Economic Exposure is thru risk sharing, 14. Total Risk = Total Cost. 15. Segmentation and Liquidity are the same. 16. The Capital Asset Pricing Model isa fundamental concept of finance theory. 17. WACC is a measure for weighing the cost of goods and services. 18. If the Marginal Cost of shifts to the right the return will decline. 19. The marginal cost of capital is always lower for a MNE. 20. The Export-Import Bank is a division of the World Bank