Translation Exposure Is Less of a Concern When Earnings Are

question 32

True/False

Translation exposure is less of a concern when earnings are not remitted by the subsidiary to the parent.

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Definitions:

Nonfinancial Businesses

Companies primarily engaged in activities other than financial services, such as manufacturing, services, or retail.

Marketable Securities

Financial instruments that can be easily converted into cash, such as stocks, bonds, and Treasury bills.

Liabilities

Financial obligations or debts owed by a company or an individual to others, which must be settled over time by transferring economic benefits.

Collateralized Debt Obligations

A complex structured finance product that pools together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors.