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Chicago based Corporation X has a number of exporting transactions with companies based in Sweden. Exporting activities result in receivables. If the settlement currency is
Chicago based Corporation X has a number of exporting transactions with companies based in Sweden. Exporting activities result in receivables. If the settlement currency is the Swedish Krona, which of the following will happen by changes in the direct or indirect exchange rates?
| Direct Exchange Rate | Indirect Exchange Rate | ||
| Increases | Decreases | Increases | Decreases |
Scenario A | Loss | Gain | NA | NA |
Scenario B | Loss | Gain | Gain | Loss |
Scenario C | NA | NA | NA | NA |
Scenario D | Gain | Loss | Loss | Gain |
A. | Scenario B |
B. | Scenario D |
C. | Scenario A |
D. | Scenario C
|
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