A firm considers an exporting project and will invoice the exports in dollars. The expected cash flows in dollars would be more difficult if the currency of the foreign country is ____.

Question

Quizplus · Accepted Answer

If the currency of the foreign country is volatile, it means that the exchange rate fluctuates frequently, making it challenging for the firm to predict and manage its cash flows. The firm may face difficulties in invoicing, receiving payments, and repatriating profits due to unpredictable changes in exchange rates. Therefore, a volatile currency creates more uncertainty and risk for the exporting project.

A Firm Considers an Exporting Project and Will Invoice the Exports