Unformatted text preview: be overwhelmed by other economic forces that place upward pressure on the value of the pound. 2. How would the performance of the Sports Exports Company be affected by the Bank of England's policy of flooding the foreign exchange market with British pounds (assuming that it does not hedge its exchange rate risk)? ANSWER: The performance of the Sports Exports Company would be adversely affected by the Bank of England's policy to flood the foreign exchange market with pounds because this policy places downward pressure on the value of the pound. If the pound weakens, the receivables of the Sports Exports Company will convert to fewer dollars, which reflects a reduction in revenue....
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- Fall '10
- Foreign exchange market, Bank of England, Pound sterling, Sports Exports company