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4 November, 22:22

Phillips NV produces DVD players and exports them to the United States. Last year the exchange rate was $1.25/euro and Phillips charged 120 euro per player in Euroland and $150 per DVD player in the United States. Currently the spot exchange rate is $1.45/euro and Phillips is charging $160 per DVD player. What is the degree of pass through by Phillips NV on their DVD players?

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  1. 4 November, 22:26
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    Answer: The exchange rate pass through is 41.7 = 6.666666667%:16%

    Explanation:

    Currently, from last year to the current year, there has been a 16% increase change in the exchange rate and a 6.667% change in the price. The exchange rate pass through is 41.7 = 6.666666667%:16%

    For every increase in 1% of the exchange rate, there has been a 41.7% increase in the current price of the DVD player.
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Home » Business » Phillips NV produces DVD players and exports them to the United States. Last year the exchange rate was $1.25/euro and Phillips charged 120 euro per player in Euroland and $150 per DVD player in the United States.
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