Generally speaking, a firm wants to receive cash flows from a currency that is ________ relative to their own, and pay out in currencies that are ________ relative to their home currency.
A) appreciating; depreciating
B) depreciating; depreciating
C) appreciating; appreciating
D) depreciating; appreciating

Question

Quizplus · Accepted Answer

A firm wants to receive cash flows in a currency that is appreciating relative to their own currency as it will provide them with a higher return when they convert it back to their home currency. Similarly, they would like to pay out in currencies that are depreciating relative to their home currency as it will lower their costs.

Generally Speaking, a Firm Wants to Receive Cash Flows from a Currency