Which of the following is an example of economic exposure but not an example of transaction exposure? A. A decrease in the Swiss franc's value decreases the dollar value of interest payments on a Swiss deposit sent to a U.S. firm by a Swiss bank. B. An increase in the pound's value increases the U.S. firm's cost of British pound payables. C. A decrease in the peso's value decreases a U.S. firm's dollar value of peso receivables. D. An increase in the dollar's value hurts a U.S. firm's domestic sales because foreign competitors are able to increase their sales to U.S. customers.
Which of the following is an example of economic exposure but not an example of transaction exposure? A. A decrease in the Swiss franc's value decreases the dollar value of interest payments on a Swiss deposit sent to a U.S. firm by a Swiss bank. B. An increase in the pound's value increases the U.S. firm's cost of British pound payables. C. A decrease in the peso's value decreases a U.S. firm's dollar value of peso receivables. D. An increase in the dollar's value hurts a U.S. firm's domestic sales because foreign competitors are able to increase their sales to U.S. customers.
Chapter11: Managing Transaction Exposure
Section: Chapter Questions
Problem 31QA
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Question
Which of the following is an example of economic exposure but not an example of transaction exposure?
A.
A decrease in the Swiss franc's value decreases the dollar value of interest payments on a Swiss deposit sent to a U.S. firm by a Swiss bank.
B.
An increase in the pound's value increases the U.S. firm's cost of British pound payables.
C.
A decrease in the peso's value decreases a U.S. firm's dollar value of peso receivables.
D.
An increase in the dollar's value hurts a U.S. firm's domestic sales because foreign competitors are able to increase their sales to U.S. customers.
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