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StanleyManufacturing, aU.S. company, sells merchandise today to a British company for 100,000.The current exchange rate is $2.03/, the account is payable in three months, and
StanleyManufacturing, aU.S. company, sells merchandise today to a British company for 100,000.The current exchange rate is $2.03/, 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 (remains unhedged). If the exchange rate changes, the value of the accounts receivable converted todollars will change.If the exchange rate changes to $2.05/,what will Stanley Manufacturing's profit or loss be?
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