The following describes a translation exposure of exchange rate risk. Your ﬁrm has subsidiaries
throughout the world. Due to the recent depreciation of the dollar against most foreign currencies,
the dollar value of your foreign sales has declined as reﬂected on the parent's ﬁnancial statements,
even though sales growth is strong.

Question

Quizplus · Accepted Answer

This describes translation exposure, which is when the value of foreign sales decreases on the parent company's financial statements due to foreign currency depreciation. This is a form of exchange rate risk.

The Following Describes a Translation Exposure of Exchange Rate Risk