Because of the high volume of bicycles as a common form of transportation in Beijing and Shanghai, Carl wants to sell his bicycle horns in these foreign markets. Currently, the U.S. dollar is trading at a higher rate than the Chinese yuan. Economically speaking, how are Carl's prospects?
Speaking economically, Carl's prospects are vulnerable to fluctuations in the values of the currencies or the US and China.
Explanation:
The deal that Carl is set to present is vulnerable to the fact that if the value of Chinese Yuan falls against the United States dollar after he lists the bicycle horns for selling, he may incur loss.
Hence, whether Carl would make a profit or face a loss is completely dependent on the values of the two currencies.
