Chapter 10.1, Problem 2QS1

Summary Introduction

To Determine:

Managers prefer that exchange rates be what when unfavorable movements in exchange rates can be costly for business.

Introduction:

Demand for a company’s product in the global marketplace is influenced by the exchange rates. A country will see a decline in the price of its export and an increase in the price of the imports when the value of currency is weak compared to other currencies. Such situation gives opportunity to other companies to the market share away from the companies whose products are priced high.