The translation gain (or loss) is simply a paper gain (or loss). Conversely, the gain (or loss) resulting from a hedge strategy is a real gain (or loss).

Question

Quizplus · Accepted Answer

Translation gains or losses are accounting adjustments due to currency exchange rate changes, not actual cash flows. Hedge strategy gains or losses involve real transactions affecting cash flow.

The Translation Gain (Or Loss) Is Simply a Paper Gain