1. Shera Corporation has extensive liabilities denominated in pounds resulting from imports from UK. However, Shera's revenues are denominated solely in U.S. dollars. Which of the following is probably not true?
Shera has at least some transaction exposure.
All of the above are true.
Shera has at least some translation exposure.
Shera would benefit from a depreciation of the British pound.
Shera has at least some economic exposure.
2. Which of the following statements is incorrect?
A US investor invests in a Chinese stock that is denominated in Chinese yuan. She will have an increase in her dollar-denominated return if the Chinese yuan strengthens against the dollar
The standard deviation of returns, calculated as the square root of the variance of returns, is a measure of total risk of an asset or portfolio.
International mutual funds offer investors global diversification without exchange rate risk.