A USCompany That Has Purchased Inventory from a German Vendor Would

question 33

Multiple Choice

A U.S.company that has purchased inventory from a German vendor would be exposed to a net exchange gain on the unpaid balance if the

• A)​amount to be paid was denominated in dollars.
• B)​dollar weakened relative to the Euro and the Euro was the denominated currency.
• C)​dollar strengthened relative to the Euro and the Euro was the denominated currency.
• D)U.S.company purchased a forward contract to buy Euros.​

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Definitions:

Average Collection Period

The mean period required for a company to get payment from its clients.

Finance Charges

Fees representing the cost of credit or the cost of borrowing, including interest and transaction fees.

Accounts Receivable

Money owed to a company by its customers for goods or services already delivered but not yet paid for.

maturity Value

The amount that will be received at the maturity or expiration date of an investment, representing the principal plus interest.