The Following Describes a Long-Run Exposure of Exchange Rate Risk

question 99

True/False

The following describes a long-run exposure of exchange rate risk. You sell custom-designed refrigerators in Canada. The refrigerators are manufactured in Mexico and it takes about 60 days from the time you agree to a sale and accept payment in Canada until you take delivery of the refrigerator and pay the Mexican firm. Your profit, therefore, is affected by changes in the dollar/peso exchange rate between the order and delivery dates.

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Definitions:

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