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Explain How Exchange Rate Fluctuations Pose a Risk to Manufacturing

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Essay

Explain how exchange rate fluctuations pose a risk to manufacturing companies that rely upon an export strategy to compete in foreign markets.


Definitions:

Price-Weighted Index

A stock market index in which each company's influence on the index's movement is proportional to its stock price.

Bond Price Index

An index that measures the price changes of a specific set of bonds, reflecting overall movements in the bond market.

Pretax Rate of Return

The rate of return on an investment before taxes have been considered or deducted.

After-Tax Return

The net profit or loss of an investment after all taxes have been deducted.

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