If the European Subsidiary of a U

question 38

Multiple Choice

If the European subsidiary of a U.S. firm has net exposed assets of €200,000, and the euro increases in value from $1.22/€ to $1.26/€ the U.S. firm has a translation:

• A) gain of $8,000.
• B) loss of $8,000.
• C) gain of $252,000.
• D) loss of €252,000.

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Definitions:

Market Demand

The relation between the price of a good and the quantity purchased by all consumers in the market during a given period, other things constant; sum of the individual demands in the market.

Substitute Good

A product or service that can be used in place of another to satisfy similar needs or desires, often influencing consumer choices and market dynamics.

Equilibrium

A situation in a market where the quantity demanded equals the quantity supplied, leading to no net change in price.

Quantity Supplied

The total amount of a good or service that producers are willing to sell at a given price level.