A firm in the International Trade Phase of Globalization:
A) makes all foreign payments in foreign currency units and all foreign receipts in domestic currency units.
B) receives all foreign receipts in foreign currency units and makes all foreign payments in domestic currency units.
C) bears direct foreign exchange risk.
D) none of the above

Question

Quizplus · Accepted Answer

A firm in the International Trade Phase of Globalization bears direct foreign exchange risk, meaning they are exposed to fluctuations in exchange rates when making payments or receiving receipts in foreign currency units. Options A and B do not accurately describe the firm's approach to foreign currency transactions.

A Firm in the International Trade Phase of Globalization