Question

1. Appleton Co., based in the United States, has costs from orders of foreign material that are lower than 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 unaffected by

b. benefit from; be adversely affected by

c. be adversely affected by; benefit from

d. be adversely affected by; be adversely affected by

e. benefit from; benefit from

Answer 1

Answer: Option C

Explanation: In the given case, Appleton co. is engaged in foreign transactions in its business. Thus, their business heavily affects from the foreign currency exchange rates.

As we know that american dollar is the most commonly used denomination of the world that is used in international trading if the dollar becomes strong foreign counties will shift their demand to other products as buying in dollar would be hard from them.

Thus, from the above we can conclude that the correct option is C.