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Question
A Japanese company exports merchandise to a U.S. importer for 1,000,000 when the exchange rate is 107 per dollar. Payment is not due until the end of the month. At the end of the month, the exchange rate has moved to 105 per dollar, and the U.S. importer pays the Japanese exporter for the merchandise. From the standpoint of the U.S. importer, ________.
A) there is no transaction exposure since they will sell the merchandise in the United States for dollars
B) the merchandise will be carried on the books at $93,468 (rounded)
C) the Japanese exporter will be paid $9,524
D) the exposure is considered to be a translation exposure, not a transaction exposure
Answer
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