Question

Assume that the British pound and Swiss franc are highly correlated. A U.S. firm anticipates the equivalent of $1 million cash outflows in francs and the equivalent of $1 million cash outflows in pounds. During a ____ cycle, the firm is ____ affected by its exposure: strong dollar; favorably weak dollar; not strong dollar; not weak dollar; favorably

Answer 1

strong dollar; favorably

Step-by-step explanation:

During a strong dollar cycle, a US Firm is favorably accepted by its exposure because when the dollar is strong it means that it has a stronger buying or purchasing power for goods and services in other countries.

Also for a US Firm, a strong dollar cycle allows for importation of goods and services to be very cheap.