An Import-Export Business That Finds Itself in a "Short" Foreign-Currency

question 28

Multiple Choice

An import-export business that finds itself in a "short" foreign-currency position risks a financial loss if:

• A)it pays attention to exchange rate forecasts.
• B)foreign demand for its product rises (more than expected).
• C)the domestic currency depreciates (more than expected)..
• D)the foreign currency depreciates (more than expected)..

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Definitions:

Future Cash Flows

Projected financial gains or losses for a specific period in the future.

Financial Advisors

Professionals who help individuals manage their finances by providing advice on money issues such as investments, insurance, mortgages, college savings, estate planning, taxes, and retirement.

Collateral

Assets that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid according to the agreed upon terms.

Cash Flows

The full extent of money transactions processed by a business, considerably affecting its ability to liquidate assets.