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International Finance

5. About two thirds of all California almonds are exported. The ups and downs of the U.S. dollar, therefore, cause headaches for almond growers. To avoid these problems, a grower decides to concentrate on domestic sales. Does that grower bear exchange risk? Why and how?

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ANSWER. A grower who sells only in the United States still bears exchange risk because the price at which he can sell his almonds varies with the exchange rate. For example, when the dollar appreciates, foreigners will demand fewer ...

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