Use the Following Information for Questions

question 2

Multiple Choice

Use the following information for questions
A London based firm has a subsidiary located in New York.The subsidiary has $1,000 in assets, $750 in liabilities and $250 in equity.The current spot rate is $1.60/£.
-If the spot rate changes to $1.50/£, what will be the firm's gain or loss?

• A)$10.42 gain
• B)£10.42 gain
• C)$10.42 loss
• D)£10.42 loss
• E)cannot be determined

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Definitions:

Optimal Strategy

The best course of action that maximizes benefits or minimizes costs under given circumstances, often used in decision-making and game theory.

Anticipate

To expect or predict something based on current trends or information.

Oligopoly

A market structure characterized by a small number of firms whose decisions about prices and output mutually influence one another.

Oligopolists

Oligopolists are firms within an oligopoly, a market structure characterized by a small number of firms dominating the market, often leading to limited competition.