(2) A Chinese exporter exported a $500000 device to the US. The contract has been signed and the delivery date is three months later. Assuming the dollar does depreciate after three month, one dollar against RMB has dropped from 6.53 to 6.50. How much money did he lose? In order to avoid the decrease of income due to the depreciation of the US dollar, what can he do?

(2) A Chinese exporter exported a $500000 device to the US. The contract has been signed and the delivery date is three months later. Assuming the dollar does depreciate after three month, one dollar against RMB has dropped from 6.53 to 6.50. How much money did he lose? In order to avoid the decrease of income due to the depreciation of the US dollar, what can he do?

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter12: Managing Economic Exposure And Translation Exposure

Section: Chapter Questions

Problem 3ST

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