The Exchange Rate Between Any Two Currencies Is Kept the Same

question 28

Multiple Choice

The exchange rate between any two currencies is kept the same in different monetary centers by ____________.

• A)the effective exchange rate
• B)speculation
• C)arbitrage
• D)hedging

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Definitions:

Lower of Cost

A principle typically applied in the valuation of inventory and financial assets, stating to record the asset at the lower of its historical cost or current market value.

Net Realizable Value

The estimated selling price in the ordinary course of business, minus the estimated costs of completion and the necessary costs to make the sale.

Inventory

The raw materials, work-in-progress products, and finished goods considered to be the part of a business's assets that are ready or will be ready for sale.

FIFO Inventory Method

"First In, First Out," a method of inventory valuation where goods purchased first are assumed to be sold first.