If a British Company Exports to a German Company and the Export

question 91

Multiple Choice

If a British company exports to a German company and the export is denominated in euros,which of the following is true?

• A) The German company would experience a loss if the euro strengthens against the pound.
• B) The British company would experience a gain if the euro strengthens against the pound.
• C) The British company would not experience a gain or a loss because the sale is denominated in euros, not pounds.
• D) Exports result in translation exposures but not transaction exposures.

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Definitions:

Clasts

Fragments of geological detritus or material broken off from a larger solid body, often found within sedimentary rocks.

Cement

A binder, a substance used in construction that sets and hardens and can bind other materials together, commonly used in concrete to make buildings, roads, and other structures.

Clastic Sedimentary Rocks

Rocks that are composed of broken pieces of older rocks, sedimented together by processes like weathering and erosion.

Conglomerate

A sedimentary rock made up of rounded or semi-rounded fragments within a finer-grained matrix, often indicating a high-energy environment such as a fast-flowing river.