Calculate the subsidiary translation exposure in INR

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Reference no: EM131933677

1. Linda Davenport, the treasurer for JKR Inc. is doing an analysis on the hedges for the company's positive exposure of GBP 12 million (6 months). She has determined that the breakeven investment rate of return between the money market hedge and the forward hedge is 7.05%. Based on this breakeven rate, she will pick the money market hedge only if she is able to earn ___ on her investments.

A. 6.90%

B. 6.80%

C. 7.10%

D. 7.00%

2. In 2016, the Indian subsidiary of DEC, Inc. (U.S.A.) firm has exposed liabilities of INR 32 million and exposed assets of INR 37 million. The average spot rate in 2016 was INR 45/USD. The Indian interest rate was 8.15%. Calculate the subsidiary's translation exposure in INR.

A. +INR 0.1111 million

B. -INR 0.1111 million

C. -INR 5 million

D. +INR 5 million

Reference no: EM131933677

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