Because of Threats and Risks in the Global Environment, Some

question 100

Multiple Choice

Because of threats and risks in the global environment, some firms choose to take a more cautious approach by:

• A) avoiding global markets altogether.
• B) expanding only to developed countries.
• C) focusing on global niche markets.
• D) acquiring already established firms in foreign markets.

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Definitions:

Functional Currency

The currency of the primary economic environment in which the company operates.

Intercompany Transactions

Financial activities and transactions occurring between entities within the same corporate group, often requiring elimination during consolidation for accurate financial reporting.

Presentation Currency

The currency in which the financial statements are presented by the reporting entity.

Translation Difference

The difference resulting from translating the financial statements of a foreign operation into the presentation currency of the reporting entity.