1. Dual currency. In the early 1990s the UK govern- ment suggested that what is now called the euro could be used alongside local currencies. How would such a currency arrangement affect MNCs?
2. Using regression analysis to measure exposure.
a. How can a UK company use regression analysis to assess its economic exposure to fluctuations in the euro?
b. In using regression analysis to assess the sensitivity of cash flows to exchange rate movements, what is the purpose of breaking the database into sub-periods?
c. Assume the regression coefficient based on assessing economic exposure was much higher in the second sub-period than in the first subperiod. What does this tell you about the firm's degree of economic exposure over time? Why might such results occur?