Question 21.1: Exchange Rate Movement: Good or Bad News? SITUATION: You are...

Fundamentals of Corporate Finance

Exchange Rate Movement: Good or Bad News?
SITUATION: You are the purchasing agent for the U.S.-based firm buying steel in the example just discussed in the text. Your assistant, Omar, who is a British subject, runs into the office and breathlessly says: “The pound is stronger against the dollar! The new exchange rate is $1.70/£!” Is Omar’s report good news or bad news?

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