Mercury Co

question 24

Multiple Choice

Mercury Co. has a subsidiary based in Italy and is exposed to translation exposure. Mercury forecasts that its earnings next year will be €10 million. Mercury decides to hedge the expected earnings by selling €10 million forward. During the next year, the euro appreciated. Mercury's consolidated earnings were ____ affected by the euro's movement, and Mercury's hedge position was ____ affected by the euro's movement.

• A) favorably; favorably
• B) favorably; adversely
• C) adversely; favorably
• D) adversely; adversely

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Definitions:

B2B

Business to Business, a type of commerce transaction that exists between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.

Clicks-and-mortar

A business model that combines online presence with physical retail outlets, using both channels for sales and customer interaction.

Physical

Pertaining to or involving the body as opposed to the mind or spirit, or relating to things that can be seen or touched.

Clicks-and-mortar

A business model that combines both online (clicks) and offline (mortar) presences for improved customer experience.