Question
Question 8 Which of the following statementis) is/are true? (Select the correct answer from the options below the statements) (1) Invoicing in home currency means risk is not avoided but merely transferred to the customer (2) Invoicing in home currency may harm competitive advantage (3) Invoicing in home currency is a form of mitigating against transaction risk (1). (2) and (3) (1) only (1) and (2) (1) and (3) - Previous 4 pt
Answer
4.7
(271 Votes)
Sarah
Veteran · Tutor for 10 years
Answer
(1). (2) and (3)
Explanation
## Step1:Let's analyze each of these statements in the context of foreign currency transactions. ### Statement 1: Invoicing in home currency means risk is not avoided but merely transferred to the customer. This statement is correct. When a transaction is done, the company that orients the exchange rate so that the invoice is in its domestic money essentially removes the conversion's exposure. The customer buying the goods and services is therefore burdened with managing the hazard, as the need to pay frequently changes with fluctuating exchange rates.## Step2:### Statement 2: Invoicing in home currency may harm competitive advantage. This is also true because if customers have a rate change and excessive costs, they can seek transactions elsewhere. This move might granulate the competitiveness of their products.## Step3:### Statement 3: Invoicing in home currency is a form of mitigating against transaction risk. This statement is entirely correct. Transactional exposure risk is a potential revenue loss from foreign-currency-denominated agreements. By giving in domestic currency, a business might mitigate in part against a transactional hazard because it locks client payments into a rate it determines.