Which of the following is true?
A)The competitive effect is defined as the impact that a currency depreciation may have on the operating cash flow in the foreign currency by altering the firm's competitive position in the marketplace.
B)The conversion effect is defined as a given accounting cash value in a foreign currency will be converted into a lower dollar amount after currency depreciation.
C)The competitive effect is defined as a given operating cash flow in a foreign currency will be converted into a lower dollar amount after a currency depreciation.
D)none of the options

Question

Quizplus · Accepted Answer

The competitive effect is indeed defined as the impact that a currency depreciation may have on the operating cash flow in the foreign currency by altering the firm's competitive position in the marketplace. Option B describes the translation effect, and option C is incorrect as the competitive effect relates to changes in competitive position rather than changes in cash flows. Therefore, option A is the true statement.

Which of the Following Is True