Question
A U.S. firm sells merchandise today to a British company for GBP100,000. The current exchange rate is USD2.03/GBP, the account is payable in three months,
A U.S. firm sells merchandise today to a British company for GBP100,000. The current exchange rate is USD2.03/GBP, the account is payable 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 USD2.05/GBP the U.S. firm will realize a ________ of ________.
| A. | loss; USD 2000 |
| B. | gain; GBP 2000 |
| C. | loss; GBP 2000 |
| D. | gain; USD 2000 |
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
