Question

Reducing Economic ExposureColorado,Inc., is a U.S.-based MNC that obtains 10 percentof its supplies from European manufacturers.Sixty percent of its revenues are due to exports toEurope, where its product is invoiced in euros.Explain how Colorado can attempt to reduce itseconomic exposure to exchange rate fluctuations inthe euro.

Answer 1

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Step-by-step explanation:

If Colorado shifts some of its expenses to Europe they could reduce their economic exposure (Which refers to a consequential effect on a company’s cash flows as a result to an unanticipated currency rate fluctuations?). This could essentially just be certain parts of production.