1. An American manufacturer with its corporate headquarters in New York City is purchasing goods from a French supplier. Which of the following statements is true regarding the exchange rate risk for this contract?

Select one

A. Both companies could bear exchange rate risk if the contract is denominated in British pounds.

B. The American company will bear all of the exchange rate risk if the contract is denominated in dollars.

C. The French company will bear all of the exchange rate risk if the contract is denominated in frans.

D. All of the above

2. If an exchange rate is defined as one unit of the local (home) currency in terms of the number of the units of the foreign currency this is known as a(n) ______ quote. (for eg. AUD1=USD0.76)

Select one

A. direct

B. inverse

C. terms

D. indirect