Question
8. Consider again the situation for Shocker Jet Corporation from the previous question. Shocker Jets management is considering how to protect itself from exchange rate
8. Consider again the situation for Shocker Jet Corporation from the previous question. Shocker Jets management is considering how to protect itself from exchange rate exposure for future large orders from other countries. Shocker Jet is considering requiring that all future contracts be in U.S dollars rather than the currency of the country of the buyer.
a. (6 points). How will this change to requiring all contracts be written in U.S dollars (and not the currency of the country of the buyer) affect Shocker Jet Corporations transaction exposure? Briefly explain.
b. (6 points). How will this change to requiring all contracts be written in U.S dollars (and not the currency of the country of the buyer) affect Shocker Jet Corporations economic exposure? Briefly explain.
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