Foreign Currency Transactions
the Following Table Summarizes the Facts of Five

question 77

Essay

Foreign currency transactions
The following table summarizes the facts of five independent cases (labeled a through e) of American companies engaging in credit transactions with foreign corporations while the foreign exchange rate is fluctuating:
Instructions:
After evaluating the information about each case, fill the blank space that has been left in one of the four columns denoted by a yellow color.
The content of each column and the word or words that you should enter in the blank spaces are described below:
Column 1 indicates the type of credit transaction in which the American company engaged with the foreign corporations. The answer entered in this column should be either "Sales" or "Purchases."
Column 2 indicates the currency in which the invoice price is stated. The answer may be either "U.S. dollars" or "Foreign currency."
Column 3 indicates the direction in which the foreign currency exchange rate has moved between the date of the credit transaction and the date of settlement. The answer in this column may be either "Rising" or "Falling."
Column 4 indicates the effect of the exchange rate fluctuation upon the income of the American company. The answers entered in this column are to be selected from the following: "Gain," "Loss," or "No effect."
$$\begin{array} { | c | c | c | c | c | } \hline&&{ \text { Column } } \\\hline & \text { Type of Credit } & \text { Currency Used in } & \text { Exchange Rate } & \text { Effect on } \\\hline & \text { Transaction } & \text { Contract } & \text { Direction } & \text { Income } \\\hline \text { Case } & 1 & 2 & 3 & 4 \\\hline & & & & \\\hline \text { (a.) } & \text { Sales } & \text { Foreign currency } & \text { Falling } & \\\hline \text { (b.) } & \text { Purchases } & \text { U.S. dollars } & \text { Rising } & \\\hline \text { (c.) } & & \text { Foreign currency } & \text { Rising } & \text { Loss } \\\hline \text { (d.) } & \text { Sales } & & \text { Falling } & \text { No effect } \\\hline \text { (e.) } & \text { Purchases } & \text { Foreign currency } & & \text { Gain } \\\hline & & & & \\\hline\end{array}$$

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Definitions:

American Attitude

The collective mindset or cultural outlook of the American people, which can vary widely on issues ranging from politics to social values.

Felix Frankfurter

An associate justice of the United States Supreme Court who served from 1939 to 1962, noted for his liberal judicial philosophy and advocacy for civil rights and liberties.

Nicola Sacco

An Italian-American anarchist who, along with Bartolomeo Vanzetti, was controversially convicted of murder and executed in 1927, leading to significant public outcry and debate over the fairness of their trial.

Bartolomeo Vanzetti

An Italian-American anarchist who, along with Nicola Sacco, was controversially tried and executed for robbery and murder in the 1920s.