An American firm imports an input for its product from France. The payment is made on delivery of the goods to the firm. When the order was placed, the exchange rate was $1.2 per euro and goods were to be delivered within one month. However, the exchange rate appreciated to $1.5 per euro before the delivery was made. 

If 2,000 units of the input were imported at €5 each, calculate the loss/gain to the U.S. firm caused by the change in the exchange rate. (Assume there are no hedging contracts.)

Answer rating: 100% (QA)

To calculate the lossgain to the US firm caused by the change in the exchange rate you need to compa... View the full answer