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.

---

Definitions:

Total Utility

The overall satisfaction or value a consumer derives from consuming a certain amount or quantity of goods and services.

Marginal Benefit

The maximum price a consumer will be willing to pay for an additional unit of a product. It is the dollar value of the consumer’s marginal utility from the additional unit, and therefore it falls as consumption increases.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen over others.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually do pay.