Question

Which of the following firms is NOT exposed to translation exposure?

Seleccione una:

a. Firm X, with a fully owned subsidiary that periodically remits earnings generated in Great Britain to the U.S.-based parent.

b. Firm Z, with a fully owned subsidiary that generates substantial earnings in Germany. The subsidiary never remits earnings but reinvests them in Germany.

c. Firm Y, with a fully owned subsidiary that periodically generates foreign losses in Sweden. The parent covers at least some of these losses.

d. All of these firms are exposed to translation exposure.

Answer 1

Ans d. All of these firms are exposed to translation exposure.

The following firms are NOT exposed to translation exposure: Firm X, with a fully owned subsidiary that periodically remits earnings generated in Great Britain to the U.S.-based parent, Firm Z, with a fully owned subsidiary that generates substantial earnings in Germany. The subsidiary never remits earnings but reinvests them in Germany, Firm Y, with a fully owned subsidiary that periodically generates foreign losses in Sweden. The parent covers at least some of these losses.