Assume a U

question 74

Multiple Choice

Assume a U.S. exporter sells to a British importer and denominates the sale in dollars. If the dollar rises over time against the British pound,what types of economic exposure and/or possible strategies could the exporter or importer face?

• A) The U.S. exporter has no economic risk because the sale is denominated in dollars.
• B) The British importer has only economic risk if the dollar falls against the pound.
• C) The U.S. exporter could lower prices in order to reduce the cost to the importer and thereby keep up sales volume.
• D) The U.S. exporter does not face an economic exposure, but the British importer does because it must pay in dollars.

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Definitions:

Production/Delivery

The process and logistics involved in creating a product and making it available to the end customer, including manufacturing and shipping stages.

Repetitive Services

Services that are provided in a consistent and continuous manner, often characterized by the repetition of similar tasks or functions.

Retail Hardware Store

A business venue that sells tools, building supplies, and equipment directly to consumers for home improvement and repair projects.

Chargeout Rates

The rates that a company charges for its services, often used in professional services industries to bill clients.