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A US importer will purchase 500 Italian sport cars on each of the following dates: the 15th of FEB, APR, JUL and OCT of 2014. The price per car is fixed at EUR40,000/car. 3.1 What is the risk born by the US importer

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Answer:

Foreign exchange risk

Step-by-step explanation:

Foreign exchange risk is associated with currency fluctuations. When foreign currencies fluctuate, the accounts receivables or payables will vary. Sometimes these variations are positive for your business and a gain might result, e.g. the price of euros decreases and you need less dollars to pay your debt. But other times, variations might result in negative consequences for your business. E.g. the price of euros increases, meaning that you will need more dollars to pay your debt.

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