Which of the Following Are True Statements

question 71

Multiple Choice

Which of the following are true statements?

• A)Since translation exposure does not have an immediate direct effect on operating cash flows, its control is relatively unimportant in comparison to transaction exposure, which involves potential real cash flow losses.
• B)Since it is generally not possible to eliminate both translation exposure and transaction exposure, it is more logical to effectively manage transaction exposure.
• C)Two ways to control translation risk are: a balance sheet hedge and a derivatives "hedge."
• D)All of the above are true statements

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Definitions:

Variable Costs

Variable Costs are expenses that change in proportion to the activity of a business.

Fixed Costs

Costs that do not change with the volume of production or sales, such as rent, salaries, and insurance premiums.

Business Plan

A formal document detailing the goals, strategy, market, and financial projections for a business's operations.

Operating Income

The profit realized from a business's core operations, excluding deductions of interest and taxes.