Question Details

Most of Longhorn- competition is from U.S. 


1. Transaction Exposure. Aggie Co. produces chemicals. It is a major exporter to Europe, where its
main competition is from other U.S. exporters. All of these companies invoice the products in U.S.
dollars. Is Aggie- transaction exposure likely to be significantly affected if the euro strengthens or
weakens? Explain. If the euro weakens for several years, can you think of any change that might
occur in the global chemicals market?

2. Economic Exposure. Longhorn Co. produces hospital equipment. Most of its revenues are in the
United States. About half of its expenses require outflows in Philippine pesos (to pay for
Philippine materials). Most of Longhorn- competition is from U.S. firms that have no
international business at all. How will Longhorn Co. be affected if the peso strengthens?



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