Which of the Following Statements Are Correct

question 13

Multiple Choice

Which of the following statements are correct?
I.The usage of forward rates increases the short-run exposure to exchange rate risk.
II.Accounting translation gains and losses are recorded in the equity section of the balance sheet.
III.The long-run exchange rate risk faced by an international firm can be reduced if a firm borrows money in the foreign country where the firm 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 III only
• C)I, II, and III only
• D)II, III, and IV only
• E)I, III, and IV only

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Definitions:

Corporate Governance

The system of rules, practices, and processes by which a company is directed and controlled, involving balancing the interests of its stakeholders.

Strategy Implementation

The execution of a strategic plan or the process of putting a newly chosen strategy into effect to achieve organizational goals.

Focused Cost Leadership

A strategy where a business aims to be the lowest cost producer in a specific niche or segment.

Competitive Advantage

The attributes that allow an organization to outperform its competitors, including cost structure, product offerings, brand reputation, and customer service.