B1 - M6: Financial Risk Management II

Question 1

Affect of domestic currency appreciation

Answer 1

• Foreign imports and competition will increase since the cost for foreigners to buy domestic goods is more expensive
• Competition from foreign companies will increase since foreign goods will be less expensive

Question 2

Affect of domestic currency depreciation

Answer 2

• Foreign imports and competition will decrease since the cost for foreigners to buy domestic goods is less expensive
• Competition from foreign companies will decrease since foreign goods will be more expensive