Consider a U

question 30

Multiple Choice

Consider a U.S.importer desiring to purchase merchandise from a Dutch exporter invoiced in euros,at a cost of €512,100.The U.S.importer will contact his U.S.bank (where of course he has an account denominated in U.S.dollars) and inquire about the exchange rate,which the bank quotes as €1.0242/$1.00.The importer accepts this price,so his bank will ____________the importer's account in the amount of ____________.

• A)debit, $500,000
• B)credit, €512,100
• C)credit, $500,000
• D)debit, €512,100

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Definitions:

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Interest Expense

Over a span of time, the monetary burden borne by an entity due to borrowed capital.

Earning Per Share

A company's net profit divided by the number of its outstanding shares, indicating the profitability on a per-share basis.

Total Equity

The sum of all stakes in a corporation, determined by subtracting total liabilities from total assets.