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 thiscontract?

A.

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

B.

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

C.

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

D.

Both B and C are correct.