Vada, Inc Exports Computers to Australia Invoiced in U

question 30

Multiple Choice

Vada, Inc. exports computers to Australia invoiced in U.S. dollars. Its main competitor is located in Japan. Vada is subject to:

• A)economic exposure.
• B)transaction exposure.
• C)translation exposure.
• D)economic and transaction exposure.

---

Definitions:

Capital Structure

The mix of various forms of external funds and equity that a firm uses to finance its activities.

High Leverage

Refers to the use of significant amounts of borrowed money (debt) to increase the potential return of an investment.

Interest Obligations

The amount of interest that a borrower is contractually obligated to pay to lenders over a specified period of time.

Equity Capital

Funds that are invested in a company by its shareholders in exchange for ownership rights or shares, representing the risk capital of the business.