Final answer:
The claim that Lessard and Lorange recommend the use of combination IE to determine corporate currency with the least distortion potential is false. Exchange rate policies, including merged currencies like the euro, carry different risks and benefits.
Step-by-step explanation:
The statement that Lessard and Lorange recommend the use of combination International Economics (IE) to determine corporate currency as the potential for distortion is lowest is false. Examining different exchange rate policies, including soft pegs, hard pegs, and merged currencies, can reveal various risks and benefits.
For instance, a merged currency eliminates foreign exchange risk, as seen in the use of the euro across many European nations, but it does not necessarily minimize the potential for distortion in corporate currency valuation. Each approach to exchange rate policy, including soft pegs and hard pegs, carries its own set of tradeoffs when it comes to financial stability and the banking sector.