J&D produces kindles in the Euro area and exports them to the United States. Last year the exchange rate was $1.20/Euro and J&D charged 130 Euros per kindle in the Euro area and $140 per kindle in the United States. Currently the spot exchange rate is $1.45/Euro and J&D is charging $158 per kindle. Calculate the degree of pass- through by J&D on their kindles and interpret your findings. A. The degree of pass-through is 0.6171. Therefore, only 38.29% of the exchange rate change was passed through to the U.S. dollar price. B. The degree of pass-through is 0.3829. Therefore, only 38.29% of the exchange rate change was passed through to the U.S. dollar price. C. The degree of pass-through is 0.6171. Therefore, only 61.71% of the exchange rate change was passed through to the U.S. dollar price. D. The degree of pass-through is 0.71. Therefore, only 71% of the exchange rate change was passed through to the U.S. dollar price. The remaining 29% has been absorbed by the company.
J&D produces kindles in the Euro area and exports them to the United States. Last
year the exchange rate was $1.20/Euro and J&D charged 130 Euros per kindle in the
Euro area and $140 per kindle in the United States. Currently the spot exchange rate
is $1.45/Euro and J&D is charging $158 per kindle. Calculate the degree of pass-
through by J&D on their kindles and interpret your findings.
A. The degree of pass-through is 0.6171. Therefore, only 38.29% of the exchange
rate change was passed through to the U.S. dollar price.
B. The degree of pass-through is 0.3829. Therefore, only 38.29% of the exchange
rate change was passed through to the U.S. dollar price.
C. The degree of pass-through is 0.6171. Therefore, only 61.71% of the exchange
rate change was passed through to the U.S. dollar price.
D. The degree of pass-through is 0.71. Therefore, only 71% of the exchange rate
change was passed through to the U.S. dollar price. The remaining 29% has
been absorbed by the company.
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