Which of the Following Firms Is Not Exposed to Translation

question 28

Multiple Choice

Which of the following firms is not exposed to translation exposure?

• A) Firm X, with a fully owned subsidiary that periodically remits earnings generated in Great Britain to the euro-based parent.
• B) Firm Y, with a fully owned subsidiary that periodically generates foreign losses in Sweden; the parent covers at least some of these losses.
• C) Firm Z, with a fully owned subsidiary that generates substantial earnings in Germany; the subsidiary never remits earnings but reinvests them in Germany.
• D) All of the above firms are exposed to translation exposure.

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Definitions:

Shareholder Theory

A theory in business ethics suggesting that the primary responsibility of a company is to maximize the wealth of its shareholders.

Triple Bottom Line Theory

A sustainability framework that examines a company's social, environmental, and financial performance, aiming to measure the broader impact of the company's activities.

Dividend Payments

Distributions of earnings made to shareholders by corporations, usually in the form of cash or additional shares.