If a U.S. exporter expects to receive a payment of £200,000 from a London importer in two months after the products are shipped. With the current rate it would be worth $300,000. Two months later the rate changes and reduces the actual dollar avenue to $260,000. Therefore, the U.S. exporter will suffer a $40,000___________________.
A) foreign exchange loss
B) foreign exchange gain
C) borrowing loss
D) net loss

Question

Quizplus · Accepted Answer

The U.S. exporter will suffer a foreign exchange loss of $40,000 because the change in the exchange rate reduced the actual dollar value of the payment received from the London importer.

If a US Exporter Expects to Receive a Payment of £200,000 from £200,000