Which of the Following Statements Concerning the Effects of Fluctuating

question 53

Multiple Choice

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true?

• A) Fluctuating exchange rates do not pose significant risks to a company's competitiveness in foreign markets.
• B) The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.
• C) Companies that are manufacturing goods in a particular country and are exporting much of what they produce are disadvantaged when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.
• D) Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.
• E) Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

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Definitions:

Actual Rate

A term that can refer to the real, observed interest rate, exchange rate, or other financial variable in contrast to a theoretical or estimated rate.

Standard Hours

The expected time it should take to complete a specific task or produce a given quantity of goods under normal conditions.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders.

Operating Income

The profit realized from a business's operations after deducting operating expenses from gross profit.