17 a)

1. Firm AAA located in the U.S. purchases products today from a firm in Germany for 100,000. The current exchange rate is $1.30/. Also, the account is payable in one year. Assume that firm AAA would like to take the risk in the market without taking any hedging techniques for reducing or eliminating the risk in the FX market. Assume that one year later, the exchange rate changes to $1.40/. By then, firm AAA will generate a ________ of ________.

   		loss; $10,000
   		gain; 10,000
   		gain; $10,000
   		loss; 10,000