Assume the exchange rate for the Mexican peso is falling relative to the U.S.dollar.An American company will incur losses from this falling exchange rate if the company is making:

Question

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When the exchange rate for the Mexican peso is falling relative to the U.S. dollar, it means that the peso is depreciating. If an American company is making credit sales to Mexican companies at prices stated in Mexican pesos, when it converts those sales back into U.S. dollars, it will receive fewer dollars for the same amount of pesos, leading to losses.

Assume the Exchange Rate for the Mexican Peso Is Falling