When the Local Currency of the Foreign Subsidiary Is the Functional

question 52

Multiple Choice

When the local currency of the foreign subsidiary is the functional currency,a foreign subsidiary's inventory carried at cost would be converted to U.S.dollars by:

• A) translation using historical exchange rates.
• B) remeasurement using historical exchange rates.
• C) remeasurement using the current exchange rate.
• D) translation using the current exchange rate.

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Definitions:

Efficient Markets Hypothesis

The theory that all available information is already reflected in stock prices, implying it is impossible to consistently achieve higher returns.

Weak-Form Efficient

A theory stating that all past prices of a stock are reflected in its current price and that technical analysis cannot consistently outperform the market.

Above-Normal Rate Of Return

Earnings that exceed what is typically expected or required, often reflecting superior performance or risk.

Constant Rate

The steady, unchanging rate at which a quantity such as interest, growth, or decay progresses over time.