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King's Bank, a British Company, Purchases Market Research Services from Harris

Question 20

Multiple Choice

King's Bank, a British company, purchases market research services from Harris Interactive, a U.S. company. As per the terms of the contract, payment is to be made three months later in U.S. dollars when the report is delivered. How would King's Bank like to see the exchange rate move, assuming it isn't hedging the transaction?


A) It hopes that the U.S. dollar appreciates in value against the British pound.
B) It hopes that the British pound appreciates in value against the U.S. dollar.
C) It makes no difference, since they are the customer and the sale takes place in the U.K.
D) It hopes that there is no change between the spot rate and the forward rate.

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