Chapter 13, Problem 47E

Match each term in Column A with its related definition in Column B.

Column A

1. 1. ____________ Spot rate
2. 2. ____________ Currency appreciation
3. 3. ____________ Translation risk
4. 4. ____________ Transaction risk
5. 5. ____________ Exchange rate

Column B

1. a. The rate at which one currency can be traded for another currency.
2. b. The possibility that future cash transactions will be affected by changing exchange rates.
3. c. A month ago, $1 U.S. was worth 8.5 Mexican pesos. Today, $1 is worth 9.0 Mexican pesos. The U.S. dollar has undergone what?
4. d. The degree to which a firm’s financial statements are exposed to exchange rate fluctuation.
5. e. The exchange rate of one currency for another for immediate delivery (today).