You sell custom-designed refrigerators in Canada. The refrigerators are manufactured in Mexico
and it takes about 60 days from the time you agree to a sale and accept payment in Canada until
you take delivery of the refrigerator and pay the Mexican ﬁrm. Your proﬁt, therefore, is affected by
changes in the dollar/peso exchange rate between the order and delivery dates. The following was
an example of a short run exchange rate risk.

Question

Quizplus · Accepted Answer

The short run exchange rate risk refers to the fluctuations in the exchange rate within a short period of time, typically less than a year. In this case, the 60-day gap between the order and delivery dates falls within this time frame, making it an example of short run exchange rate risk.

You Sell Custom-Designed Refrigerators in Canada