As the newly appointed CEO of BKP Bikes, you are preparing the earnings report from various divisions for the crucial shareholder meeting. At the start of the year, your company's Italian subsidiary showed impressive revenue, tallying 30,000,000 million Euros. The initial exchange rate was 0.65 Euro = 1 USD. By year-end, the exchange rate astonishingly shifted to 0.60 USD = 1 Euro.

 

1. What happened here? Which currency appreciated, and which one depreciated? Explain the ramifications of this change. 
2. Calculate the profit difference in USD, considering both exchange rates (what the profits would have been if converted to USD at the different exchange rates, beginning versus the end of the year). You need to provide the calculation for credit.
3. Assess whether the exchange rate shift benefits or disadvantages U.S. exports, and explain your reasoning.
4. Analyze how the exchange rate change impacts the demand for Italian imports in the U.S. and provide an explanation.
5. Discuss and elaborate on the effects of THIS exchange rate change on translation and economic exposure.