Motorola Has a Contract to Deliver Cellular Telephones in Japan

question 31

Multiple Choice

Motorola has a contract to deliver cellular telephones in Japan in 6 months from now and the payment for these telephones will be in Japanese yen.What type of foreign exchange risk does Motorola face?

• A)economic exposure
• B)operating exposure
• C)transaction exposure
• D)translation exposure

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Definitions:

Free Exit

The condition in a market where firms can leave the industry without incurring high costs, facilitating competition and economic efficiency.

Perfectly Competitive Firm

A company that operates in a market where there are many buyers and sellers, all selling homogeneous products, with no single party having market control.

Perfectly Competitive Market

A market structure where many firms offer an identical product, and no single supplier can influence the market price.

Control Over Price

The ability of a company or entity to dictate the price at which they sell their products or services, often due to lack of competition.