Question

Translation exposure refers to ________. a. accounting exposure. b. the effect that an unanticipated change in exchange rates will have on the consolidated financial reports of an MNC. c. the change in the value of a foreign subsidiaries assets and liabilities denominated in a foreign currency, as a result of exchange rate change fluctuations, when viewed from the perspective of the parent firm. d. all of the options

Answer 1

Answer:

d. all of the options is the correct answer.

Explanation:

• Translation exposure is also described as translation risk.

• It is a risk that a corporation's liabilities, income, and assets will vary because the exchange rate gets change.

• Transaction exposure is the risk that is faced by the company or multinational corporation that owns subsidiaries running in a different country.

• Translation exposure can be avoided through hedging strategy, through buying international currency and via utilizing currency futures.