Question $1$

$1$ pts

Suppose a US$-$based importer agrees to purchase $1$ million widgets from a German$-$based exporter. The contract is signed on July $1$ with the shipment due to be sent two months later, on September $1.$ The value of the contract is stated as $10$ million euros. The exchange rate on July $1$ is $1$ euro equals $1$ US dollar. Which of the following is true?

The price for the US importer, in US dollars, will increase if during the period between Kly $1$ and September $1$ the US dollar appreciates against the euro.

The US importer does not incur exchange rate risk because the contract price is specified in euror.

Since the contract is specified in euros, the US importer has passed all the exchange rate risk to the German exporter.

There is no exchange rate risk to eilther the German exporter or the US importer with this tressetion.

The price for the US importer, in US dollars, will decrease if during the period between July $1$ and September $1$ the US dollar Tappreciates against the euro.