About expected changes in exchange rates

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Reference no: EM131990537

1. Assume that a firm wants to add staplers to their product line and sell each unit for $15. Staplers cost $5 per unit to manufacture. Assuming incremental fixed costs are $10,000, what can we say with certainty about the project?

A. If 1,000 units are sold, (cash break even), the project has a negative NPV.

B. The project should be rejected.

C. The project should be accepted.

D. If 1,000 units are sold (cash break even), the project has a positive NPV.

2. From an investors perspective, if the foreign exchange market is effecient, information about expected changes in exchange rates should be widely known and thus reflected in a firm's market value. Only _____ in exchange rates or an _____ foreign exchange market, should cause market value to change.

A) expected changes; efficient

B) unexpected changes; efficient

C) expected changes; inefficient

D) unexpected changes; inefficient

Reference no: EM131990537

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