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Answer: decrease.
## Explanation When EUR strengthens relative to USD: - EUR/USD exchange rate increases (more EUR per USD) - This means it takes more USD to buy the same amount of EUR - European revenues are denominated in EUR - When translating these EUR revenues to USD for reporting purposes: - Each EUR of revenue converts to fewer USD - Therefore, the total reported revenue in USD decreases **The correct answer is A: decrease** because a stronger EUR relative to USD means the company receives fewer USD when converting its EUR-denominated revenues.
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A US-based company has significant operations in Europe. If EUR strengthens relative to USD, after translating the European revenues into USD, the company's reported revenues most likely:
A
decrease.
B
remain unchanged.
C
increase.