Which of the following illustrates non-contractual exchange-rate risk?
A)A Canadian importer will owe $\le$50,000 and the pound is expected to appreciate
B)A French airplane manufacturer has suppliers in Canada and the exchange rate has been unstable
C)A Canadian distributor of Japanese electronic goods expects the Dollar to depreciate
D)A Canadian subsidiary of a German manufacturer transfers DM100,000 to the parent annually

Question

Quizplus · Accepted Answer

Non-contractual exchange-rate risk refers to the risk that arises from unexpected changes in exchange rates that are not covered by a contractual agreement. In option C, the Canadian distributor of Japanese electronic goods expects the Dollar to depreciate, which represents a situation of non-contractual exchange-rate risk as it is not covered by any contractual agreement. Option A and D refer to contractual exchange-rate risk, where the exchange rate risk is addressed in a contract. Option B refers to operational exchange-rate risk, which arises from day-to-day operations such as purchasing and selling goods or services in a foreign currency.

Which of the Following Illustrates Non-Contractual Exchange-Rate Risk? A)A Canadian ≤\le≤

Which of the Following Illustrates Non-Contractual Exchange-Rate Risk?
A)A Canadian $\le$