Comparing Exposures Erie Co., a U.S. based firm, has most of its business in the...
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Comparing Exposures Erie Co., a U.S. based firm, has most of its business in the United States, except that it exports to Belgium. Its exports have been invoiced in euros (Belgiums currency). It has no foreign subsidiaries. Its main competition when selling to Belgiums customers is a company in Belgium that sells similar products, denominated in euros. Is Erie Co. subject to transaction exposure, translation exposure, and economic exposure? Starting today, Eire plans to adjust its pricing strategy to invoice its exports in U.S. dollars instead of euros. Based on the new strategy, how will Eries exposures to exchange rate risk change? Will Erie Co. be subject to economic exposure to exchange rate risk in the future? Briefly explain.
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