Question

​Depreciation of the euro relative to the U.S. dollar will cause a U.S.-based MNC’s reported earnings (from the consolidated income statement) to ____. If a firm desired to protect against this possibility, it could stabilize its reported earnings by ____ euros forward in the foreign exchange market.

Answer 1

Answer:

be reduced;selling

Explanation:

As if we compared the depreciation of the euro with U.S dollar so the U.S based earnings i.e to be reported by taking a reference from the consolidated income statement is to be reduced

Moreover, if a firm protect itself and wants to stabilize the earnings i.e to be reported so it would be done by selling the euros forwards in the market i.e foreign exchange