____ exposure occurs when an MNC translates each subsidiary's financial data to its home currency for consolidated financial statements.

Question

Quizplus · Accepted Answer

Translation exposure refers to the risk faced by a company that operates in multiple currencies and must consolidate financial statements in its home currency by translating the foreign currency denominated financial data. Transaction exposure, on the other hand, refers to the risk of losses arising from changes in foreign currency exchange rates between the time of entry or agreement of a transaction and its settlement. Economic exposure refers to the impact on a firm's cash flows and operating income due to changes in exchange rates affecting the competitiveness of its products and services in foreign markets. None of the above would not be a valid option in this context.

____ Exposure Occurs When an MNC Translates Each Subsidiary's Financial