Translation exposure would not occur with firms that:

Question

Quizplus · Accepted Answer

Translation exposure refers to the risk of changes in exchange rates affecting the translation of a firm's foreign currency denominated assets and liabilities into their home currency in the consolidated financial statements. Firms that do not have foreign operations (option A) would not have any translation exposure as they do not have foreign currency denominated assets and liabilities. Similarly, firms that operate in the same currency (option B) everywhere would not have any translation exposure as there would be no exchange rate changes to translate. Option C (use of home market language in foreign operations) is not relevant to translation exposure. Therefore, options A and B together (option D) represent the correct answer.

Translation Exposure Would Not Occur with Firms That