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.

---

Definitions:

Compounded Monthly

Interest on an investment or loan calculated and added to the principal amount on a monthly basis.

Future Payments

Payments that are scheduled to occur at future dates as part of a financial agreement or plan.

Debtor

A person or entity that owes money to another, typically as the result of a loan or other financial agreement.

Compounded Quarterly

The process by which interest is calculated and added to the principal sum of a loan or deposit four times a year.