If the British Subsidiary of a European Firm Has Net

question 6

Multiple Choice

If the British subsidiary of a European firm has net exposed assets of £125,000,and the pound increases in value from €1.40/£ to €1.44/£,the European firm has a translation:

• A) gain of €5,000.
• B) loss of €5,000.
• C) gain of £5,000.
• D) loss of £5,000.

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Definitions:

Price Level

A measure of the average level of prices of goods and services in the economy at a specific time.

Passive Approach

An investment strategy that aims to maximize returns by minimizing buying and selling actions, typically by investing in long-term vehicles like index funds.

Macroeconomic Policy

Government actions and strategies designed to influence overall economic performance, including unemployment rates, inflation, and economic growth.

Inflation Target

An inflation target is a central bank's established rate of inflation as a goal to guide monetary policy decisions.