Suppose that the U.S. firm Alcoa sells $22 million worth of aluminum to a British...
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Suppose that the U.S. firm Alcoa sells $22 million worth of aluminum to a British firm. If the exchange rate is currently
$ 1.53 equals pound 1$1.53=1and the British firm will pay Alcoa pound1 comma 307 comma 189.541,307,189.54 in 90 days, answer the following questions.
What exchange-rate risk does Alcoa face in this transaction?
A.
A falling British pound.
B.
A falling dollar.
C.
A rising British pound.
D.
As long as the British firm pays Alcoa, there is no risk.
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You can see the logs in the Dashboard.