If a European Subsidiary of a U

question 10

Multiple Choice

If a European subsidiary of a U.S. firm has net exposed liabilities of euro 500,000, and the euro drops in value from $1.40/euro to $1.30/euro then the U.S. firm has a translation

• A) gain of $50,000.
• B) loss of $50,000.
• C) gain of $450,000.
• D) loss of euro 450,000.

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