An Italian exporter exported sports apparel worth €300,000 to the UK, where the exchange rate is 0.85£/€ and billed @ 255000£ to be received after 6 months. Due to exchange fluctuations, the Italian trader received ( though received 2,55000£) in Euros only 270,000€, thus incurring a loss * a. How does the fluctuation in exchange rates affect Italian income statement?
An Italian exporter exported sports apparel worth €300,000 to the UK, where the exchange rate is 0.85£/€ and billed @ 255000£ to be received after 6 months. Due to exchange fluctuations, the Italian trader received ( though received 2,55000£) in Euros only 270,000€, thus incurring a loss * a. How does the fluctuation in exchange rates affect Italian income statement?
Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates
Section: Chapter Questions
Problem 1BIC
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An Italian exporter exported sports apparel worth €300,000 to the UK, where the exchange rate is 0.85£/€ and billed @ 255000£ to be received after 6 months. Due to exchange fluctuations, the Italian trader received ( though received 2,55000£) in Euros only 270,000€, thus incurring a loss *
a. How does the fluctuation in exchange rates affect Italian income statement?
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