_____ The U.S. dollar is the functional currency of a German subsidiary. During 2006, the German euro weakened. An unfavorable reporting result occurred as a result of this 2006 exchange rate change. What was the subsidiary's average financial position during 2006?
A) A net monetary asset position.
B) A net monetary liability position.
C) A net investment (net asset) position.
D) A net liability position.

Question

Quizplus · Accepted Answer

When the euro weakens against the U.S. dollar, a subsidiary with a net monetary asset position will experience an unfavorable exchange rate effect, as the value of its euro-denominated assets decreases in terms of the U.S. dollar.

_____ the U