FIN 535 Blades Inc. Economic Exposure

Blades, Inc. Assessment of Economic Exposure

1. How will Blades be negatively affected by the high level of inflation in Thailand if the Thai customer renews its commitment for another 3 years?

Changes in exchange rates expose an MNC to currency risk. Inflation has a direct relation to exchange rates and these changes affect a firm's competitiveness, increases or decreases sales revenue, affects the cost of goods sold, input prices, operating profits, market share, stock price, etc. all these are referred to as a firm's economic exposure.

According to the contract, Blades, Inc. USA sells 180,000 pairs of Blades speedos annually to the importer. As per the contract, Blades is selling the roller blades for 4594 Baht which is approximately 100 at...