Which of the following is likely to happen to the bottom-line performance of subsidiaries if a country devalues its currency?
A) There will be an increase in export sales of subsidiaries.
B) The price of subsidiary export goods will be higher for foreign buyers.
C) The currencies of foreign buyers will have lower purchasing power.
D) There will be a decrease in the cost of imported materials and supplies for the subsidiary.

Question

Quizplus · Accepted Answer

If a country devalues its currency, then subsidiary export sales will increase because the price of these goods will be lower for foreign buyers, whose currencies now have greater purchasing power. If the country revalues its currency, then export sales will decline because the price of goods for foreign buyers will rise because their currencies now have less purchasing power in the subsidiary's country.

Which of the Following Is Likely to Happen to the Bottom-Line