The Type of Exchange Rate Risk Known as Translation Exposure

question 17

Multiple Choice

The type of exchange rate risk known as translation exposure is best described as:

• A)the risk that a positive net present value (NPV) project could turn into a negative NPV project because of changes in the exchange rate between two countries.
• B)the problem encountered by an accountant of an international firm who is trying to record balance sheet account values.
• C)the fluctuation in prices faced by importers of foreign goods.
• D)the variance in relative pay rates based on the currency used to pay an employee.
• E)the variance between the revenue of an exporter who uses forward rates and an equivalent exporter who does not use forward rates.

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Definitions:

Clinton Administration

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Issues within a society that are viewed as causing significant harm or discomfort to members of the community, such as poverty, violence, or pollution.

Economic Problems

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Disturbances or conflicts within a society that involve multiple ethnic groups, often as a result of tensions related to cultural, political, or economic issues.