Transaction and Economic Exposure and MNC Earnings Academic Essay

Firm X is a small firm in New York City that produces various metals and sells them to local manufacturers. It has no foreign sales and purchases all materials and supplies locally. Does transaction exposure exist for this firm? Does economic exposure exist for this firm?

Consider a period in which the U.S. dollar weakens against the euro. How will this affect the reported earnings of a U.S. based MNC with European subsidiaries?

Walt Disney World built an amusement park in France that opened in 1992. How do you think this project has affected Disney’s overall economic exposure to exchange rate movements?

 

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