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:

Perceptual Set

A psychological framework or expectation that significantly influences one’s perception of sensory information.

Psychokinesis

The supposed ability to move objects by mental effort alone.

Retinal Disparity

The difference in visual images that each eye perceives because of the eyes’ different positions, contributing to depth perception.

Linear Perspective

A technique in art and drawing that creates the illusion of depth on a flat surface by converging parallel lines towards a single point on the horizon.