
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:What impact do Exchange Rate changes have on the Balance of Trade? Calculate the following
scenario and convert the purchase price of a truck into dollars for both exchange rates to see the
impact.
Truck imported from Germany to the US
Period 1
Period 2
Sales price in Euros (Does not change over periods)
600,000 Euro
600,000 Euro
Dollar to Euro Exchange Rate
Euro to Dollar Exchange Rate
S1-20 Euro
SI - 15 Euro
1 Euro = ?S
1 Euro ?S
With this information, you should be able to calculate the sales price of the truck in dollars for
Period 1 and 2. How much of a decrease/increase has the exchange rate fluctuation saved/cost us
in dollars between Period 1 and 2?
O Cost $3.000 Dollars
O Saved $10,000 Dollars
Cost $10,000 Dollars
O Cannot determine with this info due to Exchange Rate not being provided for the inverse of Euro to Dollar
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