A US-Based Company That Is Exporting Car Components into Australia

question 62

Multiple Choice

A US-based company that is exporting car components into Australia is about to complete an export order and expects to receive payment of AUD 500 000 in three months' time.The spot exchange rate is USD/AUD 1.5380.In conducting an analysis of its foreign exchange risk exposure,the company considers the impact of the following exchange rate changes:
i.USD/AUD 1.5180
ii.USD/AUD 1.5280
iii.USD/AUD 1.5480
Which of the exchange rate scenarios represents foreign exchange risk to the company?

• A) i
• B) ii
• C) iii
• D) All of the given answers are correct

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Definitions:

Problem Solving

The process of identifying a challenge or obstacle and finding a resolution or way to overcome it.

Unconscious Emotional Conflicts

Internal struggles often stemming from childhood that influence behavior and emotions without one's conscious awareness.

Hormones

Chemical messengers produced by glands in the body that regulate the activity of cells or organs.

Humanism

An outlook or system of thought attaching prime importance to human rather than divine or supernatural matters, emphasizing common human needs and seeking rational ways of solving human problems.