Thornton Corp. is based in the United States and has no foreign subsidiaries. It has extensive liabilities denominated in Indian rupees resulting from imports from India. However, Thornton's revenues are denominated solely in U.S. dollars. Which of the following is probably not true?

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Quizplus · Accepted Answer

Thornton Corp. has extensive liabilities denominated in Indian rupees resulting from imports from India, meaning it has transaction exposure. It also has no foreign subsidiaries, meaning it has no economic exposure. Thornton's revenues are denominated solely in U.S. dollars, so it does not have translation exposure. However, Thornton would benefit from a depreciation of the Indian rupee, as it would reduce the value of its liabilities in U.S. dollar terms. Therefore, the statement probably not true is that Thornton has at least some translation exposure.