Your US-Based Company Is Selling Parts to a Company in Chile

question 56

Multiple Choice

Your U.S.-based company is selling parts to a company in Chile and the company will pay you US$10,000 in 3 months. The current exchange rate is 490 pesos/US$. If the exchange rate at the time of payment is 510 pesos/US$

• A)you earn additional profit.
• B)the Chilean company will end up paying more for the goods.
• C)the Chilean company will end up paying less for the goods.
• D)you earn less profit.

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Definitions:

Consolidated Financial Statements

Financial statements that present the assets, liabilities, and operating results of a parent company and its subsidiaries as one entity, providing a complete picture of the financial health of the entire corporate group.

Long-term Investments

Investments that a company intends to hold for more than one year, including stocks, bonds, real estate, and other securities.

Fair Value

An estimate of the price at which an asset would trade in a fair transaction between market participants at the measurement date.

Trading Securities Portfolio

A collection of stocks, bonds, or other securities that a company holds for the primary purpose of selling them in the short term to profit from price changes.