Which of the Following Firms Would NOT Bear Risk Caused

question 24

Multiple Choice

Which of the following firms would NOT bear risk caused by translation exposure?

• A) A U.S based manufacturing firm with a fully owned subsidiary that generates earnings in Japan. The subsidiary always keeps and reinvests the earnings.
• B) A U.S. based retailer with a fully owned subsidiary in Canada that generates losses in Canada that the parent firm occasionally covers.
• C) A U.S. based firm with a subsidiary in Britain that occasionally remits earnings to the parent firm.
• D) All of the above are subject to translation exposure.

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Definitions:

Registrant

A business entity or individual that registers or files information with a regulatory authority.

Private Placement

The sale of securities to a relatively small number of select investors as a way of raising capital, bypassing the public markets.

Securities

Financial instruments representing ownership (stocks), a debt agreement (bonds), or the rights to ownership (derivatives) that can be bought and sold.

SEC

The U.S. Securities and Exchange Commission, a federal agency responsible for enforcing federal securities laws and regulating securities industry participants.