Question

Springfield Co., based in the U.S., has a cost from orders of foreign material that exceeds its foreign revenue. All foreign transactions are denominated in the foreign currency of concern. This firm would ____ a stronger dollar and would ____ a weaker dollar. a. benefit from; be adversely affected by b. be unaffected by; be adversely affected by c. benefit from; benefit from d. benefit from; be unaffected by e. be unaffected by; benefit from

Answer 1

Answer: a. benefit from; be adversely affected by

Explanation:

Because foreign transactions have to be executed in foreign currency, having a stronger dollar would benefit a US based company such as Springfield Co. as they will be able to get MORE foreign currency per dollar to be able to engage in transactions.

Conversely, having a weaker dollar could affect a US based company adversely as they will only get LESS of the currency in question and thus have to pay more per dollar in the transaction.