Gates Auto Inc

question 96

Multiple Choice

Gates Auto Inc.manufactures automobile engines in the United States.Gates Auto Inc.sells 200 of its 8 - cylinder Hoste model engines to a company in Canada.The total price for these engines is C$60,000.Gates Auto Inc.will deliver the engines today and receive payment in 3 months from the Canadian company.When payment is received Gates Auto will convert the C$60,000 into U.S.dollars.The spot rate is $0.7865/C$ and if the spot rate in 3 months is $0.7622/C$,how much will Gates Auto Inc.gain or lose due to exchange rate movements on this transaction if it does not perform any hedges.

• A) They will lose $1,458.29
• B) They will gain $1,458.29
• C) They will not gain or lose anything on this transaction.
• D) They will gain $31,530

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Definitions:

Trait Approach

A theoretical framework in personality psychology that focuses on the identification and measurement of specific, stable characteristics that differentiate individuals.

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Psychologists who study and categorize human personalities based on identifiable traits and characteristics.

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