Mercedes Benz & Toyota Motor Corp. 3dollar rates relative to Euro. Consequently, where the dollar depreciates, Mercedes Benz hasto make a smaller payment in Euro terms, but it would pay a larger amount in Euro if the dollarappreciates (Chan, Gan and McGraw 2015). 1.1.3: Mercedes Benz is also involved in a transaction exposure arising from its contract withInteva Products to supply sunroofs. Since Mercedes Benz is situated in Germany and IntevaProducts is situated in the United States, this leads to a transaction exposure between the twocountries’ exchange rates. This, therefore, means that Mercedes Benz is the payer of theforeign exchange. Hence, Mercedes Benz is exposed to transaction cost risk from the dollarsrates movement comparative to Euro. Mercedes Benz will hence pay less in terms of Euro ifthe dollar depreciates to purchase the sunroofs from Inteva Products. However, it will paymore in terms of Euro if the dollars appreciates. 1.1.4: Mercedes Benz has a transaction exposure emerging from its contract with Nemak tosupply cylinder heads. This is because Mercedes Benz is situated in Germany and Nemak issituated in Mexico hence difference currencies, that is, Euro and Mexican peso respectively.Because this is a buy side transaction, Mercedes Benz remains the payer of the foreignexchange in order to acquire the cylinder heads. Thus, Mercedes Benz will pay more in termsof Euro when the Mexican peso appreciates. However, Mercedes Benz will pay less in terms ofEuro in case the Mexican peso depreciates to purchase the cylinder heads from Nemak. 1.2Toyota Motor Corp 1.2.1Introduction This part discusses the transaction exposure of Toyota Motor Corp. It measures alterations inunsettled financial obligations value spent by Toyota before an alteration in rates of exchange

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