Firms whose currency is prime for devaluation may choose to purchase extra inventory from foreign sources before the devaluation occurs.Which of the following is NOT a potential problem associated with such a practice?
A)As a result of holding extra inventory, the firm now has extra sales.
B)As a result of devaluation, the local government may freeze the price at which the firm can sell its inventory.
C)The devaluation doesn't occur and the firm now experiences additional storage costs.
D)All of the above are potential problems.

Question

Quizplus · Accepted Answer

Purchasing extra inventory does not directly lead to extra sales; it only increases inventory levels.

Firms Whose Currency Is Prime for Devaluation May Choose to Purchase