Slnee the environment disclosure is much required nowadays due to raising pollut

Question

Slnee the environment disclosure is much required nowadays due to raising pollution developed and developing countries. Translation exposure, one of the three types of foreign exchange exposure: a. arises when foreign currency financial statements of foreign affiliates must be restated ) b. relates to the sensitivity of the firm's contractual cash flows denominated in foreign c. relates to the extent to which the value of the firm would be affected by unexpected d. none of the above into the parent's currency currency to exchange rate changes as measured in the firm's domestic currency changes in currency exchange rates Answer: D 10) Economic exposure, one of the three types of foreign exchange exposure: a. arises when foreign currency financial statements of foreign affiliates must be restated b. relates to the sensitivity of the firm's contractual cash flows denominated in foreign c. relates to the extent to which the value of the firm would be affected by unexpected d. none of the above into the parent's currency currency to exchange rate changes as measured in the firm's domestic currency changes in currency exchange rates Answer: C The reason is that economic exposure relates to the extent by which the value of the

Explanation / Answer

Translation exposure arises when converting/translating the value of asset of its foreign subsidiary into parent company's currency. This kind of exposure may get nulified next year and is not a matter of concern for management.

Therefore option D is incorrect.

Option A is correct.

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