Suppose that the G Company knows that it must pay ≤7 million for goods that it will receive in Britain. The current exchange rate is $1.99/≤. The risk that the corporate treasurer faces is that:

Question

Quizplus · Accepted Answer

The corporate treasurer faces a risk of the pound exchange rate rising, which would increase the cost of the goods they plan to purchase. Option B represents the highest potential increase in cost, with the exchange rate rising to $2.10/≤. Options A and D also represent potential increases in cost, but they are not as high as option B. Option C does not represent a risk to the corporate treasurer as there is no change in the exchange rate.

Suppose That the G Company Knows That It Must Pay