Bob Salyer (BS) Inc

Finance Dec 26, 2020

Bob Salyer (BS) Inc. is a U.S. exporter of high tech accounting software. The company expects to receive GBP 50,000 one year from now from one of their clients in London. During the year the USD/GBP spot rate goes from X₀^USD/GBP = 1.32 to X₁^USD/GBP = 1.15. Which of the following two statements is correct?

S1: BS Inc. loses USD 10,500 because of the weakening of the GBP.

S2: The USD appreciates by 14.78% against the GBP.

A. Both statements are correct

B. Both statements are false

C. S2 is correct but S1 is false

D. S1 is correct but S2 is false

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