A translation exposure arises because the dollar value of the exposed asset changes as the exchange rate changes.

Question

Quizplus · Accepted Answer

Translation exposure is the risk that a company's foreign currency denominated assets will change in value due to fluctuations in exchange rates. As the exchange rate changes, the dollar value of the exposed asset (such as foreign currency denominated accounts receivable, inventory, or fixed assets) will also change. Therefore, the statement is true.

A Translation Exposure Arises Because the Dollar Value of the Exposed