This risk that exchange rate movements will adversely impact reported financial results on a firm's financial statements

Question

Quizplus · Accepted Answer

Translation exposure refers to the impact of changes in exchange rates on the financial statements of a firm's foreign affiliates or subsidiaries. This arises due to the need to convert their financial statements denominated in foreign currencies into the reporting currency of the parent company. The translation process can result in gains or losses which affect the reported financial results of the firm.

This Risk That Exchange Rate Movements Will Adversely Impact Reported