Which of the Following Statements Is Correct

question 52

Multiple Choice

Which of the following statements is correct?

• A) If a foreign currency weakens with respect to the Canadian dollar, both self-sustaining and integrated foreign subsidiaries will show a foreign exchange gain.
• B) If a foreign currency weakens with respect to the Canadian dollar, both self-sustaining and integrated foreign subsidiaries will show a foreign exchange loss.
• C) If a foreign currency weakens with respect to the Canadian dollar, a self-sustaining subsidiary will show a foreign exchange gain while an integrated foreign subsidiary will show a foreign exchange loss.
• D)If a foreign currency weakens with respect to the Canadian dollar, a self-sustaining subsidiary will show a foreign exchange loss while an integrated foreign subsidiary will show a foreign exchange gain.

---

Definitions:

Externality

An economic effect of a transaction that affects third parties who did not choose to be involved in the transaction.

Externality

An externality is a cost or benefit caused by a producer that is not financially incurred or received by that producer.

Market Exchange

The process through which goods, services, or assets are traded between buyers and sellers at a determined price.

Negative Externalities

Unintended and unfavourable outcomes of an activity or transaction that affect third-party stakeholders who did not choose to be involved in that activity.