Question

Which of the following statements are true? There are several, select all that are correct. Consider each statement on its own separate from the others listed.

Question 12 options:

	Two reasons why financial management of a multinational company differs from that of purely domestic firms are: (1) different economic systems and (2) political risk
	In a monetary system with floating exchange rates, the exchange rate between two countries is determined by the relative supply and demand for their currencies
	Exchange rates are not affected by bilateral trade when there is a floating rate system
	A foreign currency will, on average, depreciate or appreciate against the U.S. dollar at a percentage rate approximately equal to the amount by which its inflation rate exceeds or is less than the U.S. rate

Answer 1

Two reasons why financial management of a multinational company differs from that of purely domestic firms are: (1) different economic systems and (2) political risk

In a monetary system with floating exchange rates, the exchange rate between two countries is determined by the relative supply and demand for their currencies

A foreign currency will, on average, depreciate or appreciate against the U.S. dollar at a percentage rate approximately equal to the amount by which its inflation rate exceeds or is less than the U.S. rate