1. One argument for the irrelevance of exchange rate risk is that:
a. individuals can invest in a diversified set of MNCs, and can take positions in currencies on their own to offset any exchange rate exposure of MNCs.
b. MNCs are not normally subject to economic exposure.
c. MNCs are not normally subject to transaction exposure.
d. MNCs can easily hedge their economic exposure.
2. A firm switches from straight-line to accelerated depreciation during the early years of a depreciable asset's life. First list each ratio below, and then explain which of the following ratios will be impacted and why they will be impacted this way?
a) Gross Profit Margin
b) Average Collection Period
c) Times interest earned
d) Asset Turnover Ratio