“Forecasting Exchange Rates and Risks Associated with Transaction and Translation Exposure” Please respond to the following:
- From the first e-Activity, determine whether or not the Big Mac Index supports the theory of PPP. Analyze the essential manner in which the IFE is reflected in the different prices on The Big Mac Index from country to country. Elaborate on the correlations between inflation and index prices, and the correlations between personal incomes and prices.
- From the second e-Activity, examine the main effect that relative inflation and interest rates could have on the selected company’s translation and transaction exposures from subsidiaries abroad. Outline a plan that proposes key steps that an MNC could take in order to mitigate translation and transaction exposures on international operations. Recommend two (2) tools that an MNC could use in order to mitigate such exposures.