LAST WORD Suppose Winter Sports—a hypothetical French retailer of snowboards—wants to order 5000 snowboards made in the United States. The price per board is

$200, the present exchange rate is 1 euro  $1, and payment is due in dollars when the boards are delivered in 3 months.

Use a numerical example to explain why exchange-rate risk might make the French retailer hesitant to place the order.

How might speculators absorb some of Winter Sports’ risk?