In a competitive market,the effect of a currency change for a price follower is that:
A)sales may be lost,so operating exposure is high.
B)the change may or not affect the foreign cash flow of the firm if the firm can effectively and efficiently change its prices.
C)increased cash flow can offset the conversion impact,so operating exposure is low.
D)since price followers do whatever the market dictates,operating exposure is low.

Question

Quizplus · Accepted Answer

In a competitive market, a price follower has limited control over pricing and may lose sales if competitors adjust prices more favorably in response to currency changes, leading to high operating exposure.

In a Competitive Market,the Effect of a Currency Change for a Price