EZ Lawn Currency Risk (Scenario)

question 71

Multiple Choice

EZ Lawn Currency Risk (Scenario)
The EZ Lawn Corporation manufactures lawn equipment such as lawn mowers, blowers, and trimmers. The lawn equipment is assembled in the U.S. at a facility in Florida, but the firm outsources inputs from a number of countries, each with varying degrees of economic stability. Given the importance of the firm's sourcing activities, EZ Lawn managers are discussing methods that might reduce the currency risk faced by EZ Lawn.
-Which of the following would most likely be an effective currency risk strategy for EZ Lawn management?

• A) increase prices of EZ Lawn products to cover currency issues
• B) decentralize the entire currency management to local managers
• C) use a spot rate for long-term transactions between suppliers
• D) monitor the economic trends of the suppliers' nations

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