Paid in dollars and the exchange rate equals

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Reference no: EM13861518

Assume an initial exchange rate where $1 = €1. An American company sells $10 million in goods to a German firm. The American company will receive less than $10 million in revenues if (assume no transactions to prevent exchange rate risk):

A. They are paid in dollars and the exchange rate equals $1 = €1.10 on the day of delivery and payment.

B. They are paid in euros and the exchange rate equals $0.90 = €1 on the day of delivery and payment.

C. They are paid in dollars and the exchange rate equals $1 = €0.90 on the day of delivery and payment.

D. They are paid in euros and the exchange rate equals $1.10 = €1 on the day of delivery and payment.

Reference no: EM13861518

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