1. (TRUE or FALSE) If a company holds stocks or bonds denominated in the U.S. dollars in other countries, the fluctuations in the value of the U.S. dollar will affect the dollar value of the stocks and bonds.
2. (TRUE or FALSE) Forward contracts are contracts in which one party agrees to buy, and the other party agrees to sell, a certain amount of a currency at a specified exchange rate at a specified future time.
3. (TRUE or FALSE) If the U.S. dollar strengthens relative to the foreign currency, the U.S. company’s profits increase due to the change in exchange rates.