The Foreign Subsidiary of a U

question 40

Multiple Choice

The foreign subsidiary of a U.S.firm is profitable when profits are measured in the foreign currency but those profits become losses when measured in U.S.dollars.This is an example of which one of the following?

• A)Interest rate disparities
• B)Short-run exposure to exchange rate risk
• C)Long-run exposure to exchange rate risk
• D)Political risk associated with the foreign operations
• E)Translation exposure to exchange rate risk