Different types of foreign exchange exposure

Problem: The Acme Company is exploring many strategic options. Whichever global business strategy the Acme Company eventually chooses, the firm inevitably will require the services of a bank to help manage its working capital. Many major multinational banks provide a variety of working capital and multinational cash management services.

Some U.S. banks also have international operations. If your company acquired a company in another country, would you choose to bank with a local bank in that country, or would you select a U.S. bank with international operations? Why would you make this selection? A few US banks with international operations are below:

• Bank of America
• Citibank


Different types of foreign exchange exposure faced by the MNC.

The structure of international financial markets and institutions, the range of instruments traded therein.

How do financial management decisions of multinational firms differ from those operations.

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Finance Basics: Different types of foreign exchange exposure
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