Question

Although MNCs may need to convert currencies occasionally, they do not face any exchange rate risk, as exchange rates are stable over time.

a. True
b. False

Answer 1

Although MNCs may need to convert currencies occasionally, they do face exchange rate risk. Exchange rates can fluctuate significantly in the short run, impacting the value of different currencies.

Step-by-step explanation:

False.

Although MNCs (Multi-National Corporations) may need to convert currencies occasionally, they do face exchange rate risk. Exchange rates can fluctuate significantly in the short run, impacting the value of different currencies. This can lead to dramatic changes in profits and losses for firms that rely on international trade. Therefore, MNCs need to be aware of and manage exchange rate risk when conducting business across borders.