Which of the Following Statements Are Correct

question 3

Multiple Choice

Which of the following statements are correct?
I. The usage of forward rates can help reduce the short-run exposure to exchange rate risk.
II. Accounting translation gains are recorded on the income statement as other income.
III. The long-run exchange rate risk faced by an international firm can be reduced if the firm borrows money in the foreign country where it has operations.
IV. Unexpected changes in economic conditions are classified as short-run exposure to exchange rate risk.

• A) I and III only
• B) II and IV only
• C) II and III only
• D) I and IV only
• E) I and II only

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Definitions:

New Automobiles

Refers to vehicles that have been recently manufactured, entering the market for the first time.

Information Value

The worth or utility derived from data that can inform decision-making or provide insights, often related to its relevance and accuracy.

Marginal Cost

The increase or decrease in the total cost of a production run for making one additional unit of an item.

Marginal Benefit

The additional satisfaction or utility gained by consuming an extra unit of a good or service.