When a Company Holds a Receivable Denominated in a Foreign

question 135

Multiple Choice

When a company holds a receivable denominated in a foreign currency:

• A)it wants the foreign currency to weaken.
• B)it wants the foreign currency to strengthen.
• C)it wants the foreign currency to remain the same.
• D)it does not matter if the foreign currency strengthens or weakens.

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Definitions:

Fiscal Policies

Government policies related to taxation and spending that aim to influence the economy.

Political Business Cycle

A theory suggesting that electoral cycles influence economic cycles, with policymakers manipulating the economy to improve re-election chances.

Fed

The Federal Reserve System, which is the central banking system of the United States, responsible for monetary policy.

Re-election

is the process by which an official, typically in a political context, wins another term in office through a voting process.