Katrina is a German student who has just completed a one-month tour of Canada When she arrived in Canada the exchange rate was EUR 1 = $.72. The exchange rate today, as she is preparing to return to Germany, is EUR 1 = $.74. Katrina _______ exposure aspects of currency exchange risks.

A) Benefited from the short-run.
B) Benefited from the translation.
C) Suffered from the long-run.
D) Suffered from the short-run.
E) Suffered from the translation.

Question

Rommel Baluran · Accepted Answer

Final Answer : D, Explanation :  When Katrina arrived in Canada, the exchange rate was EUR 1 = $.72. This means that she could exchange 1 euro for 0.72 Canadian dollars. Today, the exchange rate is EUR 1 = $.74. This means that she can exchange 1 euro for 0.74 Canadian dollars. Since the exchange rate has increased, Katrina will receive more Canadian dollars for each euro that she exchanges. This means that she will benefit from the short-run exposure aspects of currency exchange risks.

Definitions

Learning Objectives

Learning Objectives

Related questions