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Hi Sir,
I’m struggling to understand a question;
Pzk Co should invoice in dollars true or false?
Pzk Co home currency is dollar.
Company expects to receive 1.2m euros in 6 months.Statement: invoicing in dollars will eliminate the foreign risk that is exposed? Answer is False but I assumed it’s true?
As the following statement say; invoicing in dollars will pass the exchange rate risk to customer ? Answer- True..Sir both the lines contradict, I assumed statement 1 was true as the risk is passed down to customer?
Thank you
The second statement is certainly true.
However the first statement refers to foreign risk (not just foreign exchange risk). Although the foreign exchange risk is removed, there remains the economic risk in the customers may switch to other suppliers who are prepared to invoice in the foreign currency,
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