When exchange rates change
A)the value of a foreign subsidiary's foreign currency denominated assets and liabilities change to new numbers still denominated in the foreign currency.
B)the value of a foreign subsidiary's foreign currency denominated assets and liabilities change when redenominated into the home currency.
C)hedging should be done after the change.
D)none of the options

Question

Quizplus · Accepted Answer

When exchange rates change, the value of a foreign subsidiary's foreign currency denominated assets and liabilities change when redenominated into the home currency. This is because the exchange rate affects the conversion of the foreign currency into the home currency. Option A is incorrect because the values may change when converted into the home currency. Option C is also incorrect because hedging should be done before the change to reduce the risk of exchange rate fluctuations. Option D is incorrect as there is a change in the value of assets and liabilities.

When Exchange Rates Change