Geographically Diversified Operations Provide a Natural Hedge of Transaction Exposure

question 9

Multiple Choice

Geographically diversified operations provide a natural hedge of transaction exposure to currency risk because ______.

• A) operating costs in one country are unlikely to be related to costs in another country
• B) it is easy to replace sales in one country with sales from another country
• C) when one currency is depreciating, another currency must be appreciating
• D) Two of the above
• E) None of the above

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Definitions:

Review And Reconciliation

A process of ensuring that two sets of records or balances are in agreement, usually by examining and comparing documents or figures.

External Audit

An external audit is an independent examination of financial records and operations conducted by an outside entity to ensure accuracy and compliance with regulations.

Discrepancies

Differences or inconsistencies found when comparing two sets of data or reports, often requiring further investigation.

External Auditors

Independent auditors who examine the financial statements of an entity to ensure accuracy and compliance with applicable standards.