Blanca (a U.S. firm) has no subsidiaries and presently has sales to Mexican customers amounting to M

Blanca (a U.S. firm) has no subsidiaries and presently has sales to Mexican customers amounting to MXP98 million, while its peso‑denomin­ated expenses amount to MXP61 million. If it shifts its material orders from its Mexican suppliers to U.S. suppliers, it could reduce peso‑denominated expenses by MXP19 million and increase dollar‑denominated expenses by $1,800,000. This strategy would _______ the Blanca’s exposure to changes in the peso’s movements against the U.S. dollar. Regardless of whether the firm shifts expenses, it is likely to perform better when the peso is valued _______ relative to the dollar.

reduce; high

reduce; low

increase; low

increase; high

 

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