Suppose the Spot Exchange Rate Is C

question 45

Multiple Choice

Suppose the spot exchange rate is C$.75 per US dollar.The forward exchange rate is C$.80per US dollar.Which of the following is true?

• A)The Canadian inflation rate is lower.
• B)The US dollar is selling at a premium.
• C)The US dollar is selling at a discount.
• D)None of the above.

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Definitions:

Manufacturing Overhead Cost

Any expenses related to production that are not direct materials or direct labor.

Units Produced

The total number of finished products manufactured during a specific period.

Indirect Manufacturing Cost

Costs related to manufacturing that cannot be directly traced to specific units of product, similar to manufacturing overhead, including expenses like factory supervision.

Units Produced

The total quantity of products manufactured by a company during a specific period.