Which of the following is not one of the four potential currency/exchange rate situations that can exist in the absence of fixed exchange rates? (Assume the buyer is a United States company and the contract extends beyond one year)

Question

Quizplus · Accepted Answer

The four potential currency/exchange rate situations are: (1) Contract is with a global supplier, with payment in foreign currency, exchange rate stays exactly the same during the life of the contract; (2) Contract is with a global supplier, with payment in foreign currency, and the dollar strengthens; (3) Contract is with a global supplier, with payment in dollars, and the dollar weakens; and (4) Contract is with a global supplier with payment in dollars, and the dollar strengthens. Choice A describes a situation where the exchange rate does not change, which is not one of the four potential situations. Therefore, choice A is the best answer.

Which of the Following Is Not One of the Four