Under Both the Temporal Method and the Current Rate Method,what

question 18

Multiple Choice

Under both the temporal method and the current rate method,what exchange rate should be used to translate a foreign subsidiary's dividends into parent company currency?

• A)current rate
• B)historical rate
• C)average rate
• D)Any of the above methods may be used under both the temporal and current method.

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Definitions:

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window. Alternatively, it can represent the rate used to discount future cash flows in present value calculations.

Present Value

The today's worth of future money or cash flow sequences, when a certain rate of return is applied.

Discount Rate

In finance, the discount rate is the interest rate used to determine the present value of future cash flows.

Present Value

A future sum of money or cash flows' value at present, applying a specific rate of return.