1. If the U.S. dollar was expected to strengthen relative to a foreign currency (FC), what effect might this have on a U.S. exporter? 2. A U.S. company purchases inventory from a foreign vendor, and...

1. If the U.S. dollar was expected to strengthen relative to a foreign currency (FC), what effect might this have on a U.S. exporter?

2. A U.S. company purchases inventory from a foreign vendor, and purchases are denominated in the foreign currency (FC). The U.S. dollar is expected to weaken against the FC. Explain how a forward contract might be employed as a hedge against exchange rate risk.