Translation exposure is defined as:
A) the sensitivity of realized domestic currency values of the firm's contractual cash flows denominated in foreign currencies to unexpected exchange rate changes.
B) the extent to which the value of the firm would be affected by unanticipated changes in exchange rate.
C) the potential that the firm's consolidated financial statement can be affected by changes in exchange rates.
D) ex post and ex ante currency exposures.

Question

Quizplus · Accepted Answer

Translation exposure refers to the impact of currency exchange rate fluctuations on a company's consolidated financial statements. It is concerned with how these fluctuations affect the reported earnings and balance sheets when foreign operations are consolidated into the parent company's financial statements.

Translation Exposure Is Defined As