Refer to Scenario 9

question 95

Multiple Choice

Refer to Scenario 9.9 below to answer the question(s) that follow.
SCENARIO 9.9: Sponsors invest $250,000 in a new greeting card business on the promise that they will earn a return of 10% per year on their investment. The business sells 52,000 greeting cards per year. The fixed costs for the business include the return to investors and $79,000 in other fixed costs. Variable costs consist of wages ($1,000 per week) plus materials, electricity, etc. ($3,000 per week) . The business is open 52 weeks per year.
-Refer to Scenario 9.9. The business is earning exactly a normal profit. Thus, the average price per greeting card must be

Understand the risks associated with exchange rate fluctuations, including short-run, long-run, and translation exposure.

Learn the strategies for managing exchange rate risks, including the use of forward rates and financial remittances.

Distinguish between the relative and absolute versions of purchasing power parity.

Identify the conditions necessary for absolute purchasing power parity to exist.

Definitions:

Non-polar Solvent

A non-polar solvent is a liquid phase solvent without significant positive or negative charges, used to dissolve non-polar compounds.

Saquinavir

An HIV protease inhibitor used in the treatment of HIV/AIDS.

HIV Protease Inhibitor

A class of antiviral drugs used in the treatment of HIV/AIDS, designed to prevent viral replication by selectively binding to and inhibiting the protease enzyme.

Functional Group

A specific grouping of atoms within a molecule that has a predictable chemical behavior and is responsible for the characteristic reactions of the molecule.