Under What Condition Should the Gain or Loss from Translating

question 29

Multiple Choice

Under what condition should the gain or loss from translating foreign currency profit of subsidiary into the parent's home currency be included in the subsidiary's measure of performance?

• A) If the subsidiary manager is authorized to hedge the translation exposure
• B) If there is a translation gain, but not if there is a translation loss
• C) If the multinational corporation is using the same method of translation for performance evaluation as it does for financial reporting
• D) If the impact on cash flows from foreign exchange is minimal

---

Definitions:

Importance Weights

Assigned numerical values that reflect the relative significance or priority of different factors, criteria, or variables in a decision-making process.

Scholarly Reputation

The level of respect or esteem that a scholar has earned from their peers within the academic community, often based on the quality and impact of their research.

Fishbein Model

A psychological model that attempts to predict behavioral intentions across a wide range of contexts, based on the beliefs about the outcomes of behavior and evaluations of these outcomes.

Salient Beliefs

Prominent or most noticeable beliefs held by an individual that influence their behavior and attitudes.