Microeconomics 20th Edition by McConnell, Sean Flynn, Stanley Brue

Exercise 11

LAST WORD Suppose Super D'Hiver-a hypothetical French snowboard retailer-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 Super D'Hiver's risk