Which One of These Statements Is Correct

question 12

Multiple Choice

Which one of these statements is correct?

• A)Borrowing money in the country in which operations are located reduces long-run exchange rate risk.
• B)Accounting translation gains are recorded on the income statement as other income.
• C)In multidivisional firms,exchange rate risk should be managed at the division level.
• D)The usage of forward rates can help reduce the long-run exposure to exchange rate risk.
• E)Unexpected changes in economic conditions are classified as short-run exposure to exchange rate risk.

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Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher volatility than the market, while a beta less than 1 indicates lower.

T-Bills

Treasury Bills, short-term government securities with maturity periods of less than one year, considered as a safe investment.

Bull Markets

A financial market condition characterized by rising prices and investor optimism.