1. If an American firm wants to eliminate its quotation exposure, it should ___
A. use the current rate method for translation
B. quote all its prices in USD
C. quote its prices in convertible currencies
D. raise its prices by at least the cost of capital
2. USNet, Inc., an American networking equipment firm, sells CAD12.5 million worth of networking gear to a Canadian telecom company. The terms of the transaction call for a payment of CAD 12.5 million to be delivered to USNet in 9 months. The Canadian interest rate is 5.5% per year and the U.S. interest rate is 4%. The spot exchange rate is CAD 1.10/USD. How much is USNet’s transactionexposure?
A. CAD 12.5 million
B. CAD 0
C. USD 13.75 million
D. CAD 13.75 million