Which of the Following Statements Is Correct

question 52

Multiple Choice

Which of the following statements is correct?

• A) If a foreign currency weakens with respect to the Canadian dollar, both self-sustaining and integrated foreign subsidiaries will show a foreign exchange gain.
• B) If a foreign currency weakens with respect to the Canadian dollar, both self-sustaining and integrated foreign subsidiaries will show a foreign exchange loss.
• C) If a foreign currency weakens with respect to the Canadian dollar, a self-sustaining subsidiary will show a foreign exchange gain while an integrated foreign subsidiary will show a foreign exchange loss.
• D)If a foreign currency weakens with respect to the Canadian dollar, a self-sustaining subsidiary will show a foreign exchange loss while an integrated foreign subsidiary will show a foreign exchange gain.

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Definitions:

Fixed Intervals

Regular, predetermined periods of time during which certain activities or operations occur.

Equal Cash Flows

A series of identical cash inflows or outflows occurring over a specified period.

Annuity

A series of equal cash receipts spaced equally in time; a series of equal net cash flows at fixed time intervals.

Sensitivity Analysis

A form of analysis that considers the impact of changing one or more inputs or assumptions on the resulting outcome.