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问题如下：

Question A company based in the United Kingdom has significant operations in the United States and in Europe. It presents the following sensitivity analysis as part of its financial disclosures.

The potential negative impact of an unfavorable change in the USD exchange rate is:

选项：

A.A.lower than the impact of an unfavorable change in the EUR exchange rate. B.B.the same as the impact of an unfavorable change in the EUR exchange rate. C.C.greater than the impact of an unfavorable change in the EUR exchange rate.

解释：

Solution

1. Correct because the cash flow at risk is less for the USD than it is for the EUR. Total exposure is the starting point for analysis. In the next stage, these exposures are compared to all hedges that are in place. The net cash flow surplus represents an uncovered risk position. The cash-flow-at-risk approach involves allocating the impact of potential exchange rate fluctuations to operating cash flows on the basis of probability distributions. Volatilities and correlations serve as input factors to assess the relevant probability distributions.

2. Incorrect because the cash flow at risk is less for the USD than it is for the EUR.

3. Incorrect because the cash flow at risk is less for the USD than it is for the EUR.

Multinational Operations

• analyze how currency fluctuations potentially affect financial results, given a company’s countries of operation