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A U.S. firm buys merchandise today from a Japanese company for 100,000,000. The current exchange rate is 110.58/$, the account is receivable in three months,
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A U.S. firm buys merchandise today from a Japanese company for 100,000,000. The current exchange rate is 110.58/$, the account is receivable in three months, and the firm chooses to avoid any hedging techniques designed to reduce or eliminate the risk of changes in the exchange rate. If the exchange rate changes to 110.13/$, the U.S. firm will realize a ________ of ________.
translation gain; 3,695
translation loss; 3,695
transaction gain; $3,695
transaction loss; $3,695
None of the above is correct
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