Use the following information to answer Questions 1 and 2 1 Your firm is located in the U S and a major customer is located in Great Britain Due to historical negotiations, your customers pay your firm in British pounds Your firm has just recorded a sale to the customer for 500,000 The customer has 30 days to pay the invoice The current spot rate is 1 $1 24 The foreign exchange expert at your firm believes that the exchange rate in 30 days will either be 1 $1 10 or 1 $1 35 What is the US$ value of this sale at the current spot rate a $620,000 b $500,000 c $675,000 d $550,000 2 Your firm is located in the U S and a major customer is located in Great Britain Due to historical negotiations, your customers pay your firm in British pounds Your firm has just recorded a sale to the customer for 500,000 The customer has 30 days to pay the invoice The current spot rate is 1 $1 24 The foreign exchange expert at your firm believes that the exchange rate in 30 days will either be 1 $1 10 or 1 $1 35 If the US$ depreciates, what is the expected US$ value of this sale at the future exchange rate a $675,000 b $620,000 c $500,000 d $550,000

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Question: Use the following information to answer Questions 1 and 2. 1. Your firm is located in the U.S. and a major customer is located in

Use the following information to answer Questions 1 and 2.

1. Your firm is located in the U.S. and a major customer is located in Great Britain. Due to historical negotiations, your customers pay your firm in British pounds. Your firm has just recorded a sale to the customer for 500,000. The customer has 30 days to pay the invoice. The current spot rate is 1 = $1.24. The foreign exchange expert at your firm believes that the exchange rate in 30 days will either be 1 = $1.10 or 1 = $1.35. What is the US$ value of this sale at the current spot rate?

	a.	$620,000
	b.	$500,000
	c.	$675,000
	d.	$550,000

2. Your firm is located in the U.S. and a major customer is located in Great Britain. Due to historical negotiations, your customers pay your firm in British pounds. Your firm has just recorded a sale to the customer for 500,000. The customer has 30 days to pay the invoice. The current spot rate is 1 = $1.24. The foreign exchange expert at your firm believes that the exchange rate in 30 days will either be 1 = $1.10 or 1 = $1.35. If the US$ depreciates, what is the expected US$ value of this sale at the future exchange rate?

	a.	$675,000
	b.	$620,000
	c.	$500,000
	d.	$550,000

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