Anticipated cash inflows may fall in value if unexpected movements in the exchange rate hurt your ability to convert the foreign currency into domestic currency. This reduction in the conversion of future payments is called A) translation exposure B) transaction exposure C) conversion exposure D) operating exposure

Anticipated cash inflows may fall in value if unexpected movements in the exchange rate hurt your ability to convert the foreign currency into domestic currency. This reduction in the conversion of future payments is called A) translation exposure B) transaction exposure C) conversion exposure D) operating exposure

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter2: International Flow Of Funds

Section: Chapter Questions

Problem 5QA

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Question Anticipated cash inflows may fall in value if unexpected movements in the exchange rate hurt your ability to convert the foreign currency into domestic currency. This reduction in the conversion of future payments is called . A. translation exposure B. transaction exposure C. conversion exposure D. operating exposure
14. Which of the following combinations correctly describes the relationship between foreign currency transactions, exchange rate changes, and foreign exchange gains and losses? Type of Transaction Foreign Currency Foreign Exchange Gain /Loss A. Export sale Appreciates Loss B. Import purchase Appreciates Gain C. Import purchase Depreciates Gain D. Export sale Depreciates Gai
Question 22 Which of the following statements relating to foreign currency translation and remeasurement is correct? If a foreign entity's recording currency is not it's functional currency, but the functional currency is the reporting currency, translation using the current rate method is not required. if a foreign entity's recording currency is not it's functional currency, remeasurement into the functional currency using the temporal method is required If a foreign entity operates in a highly inflationary economcy, the reporting currency of the U.S. parent-the U.S. dollar, should be used. All of these statements are correct
PQ 5 In the monetary yapproach to the exchange rate, which of the following will cause a depreciation of A's currency relative to B's currency? a. an increase in the amount of money demanded at each income level in the country B b. an increase in the money supply in country B c. a fall in the real income in country B d. a decrease in the money supply in country A
Statement I - Exchange rate risk is a factor that contributes to the difficulty of the company to manage its international creditStatement II - A relaxation in collection policy that lengthens the firm collection period ultimately lengthens the firms operating cycle and cash conversion cycle a. False; False b. True; False c. True; True d. False; True
An example of transaction exposure is when Question 4 options: companies have obligations for the purchase of goods at previously agreed prices. companies borrow funds in domestic currency. there is an impact of currency exchange rate changes on the reported financial statements of a company. there is a long-term effect of changes in exchange rates. changing exchange rates persists on future prices, sales, and costs
A decrease in the expected future domestic exchange rate causes the demand for domestic assets to ________ and the domestic currency to ________ , everything else held constant. increase ; appreciate increase ; depreciate decrease ; appreciate decrease ; depreciate
(TCO F) What is the rationale for the remeasurement of foreign currency transactions?
22. A firm may seek to avoid exchange-rate risk bya. Maintaining a net monetary debtor position in countries with strengthening currencies.b. Maintaining a net monetary creditor position in countries with weakening currencies.c. Avoiding diversification of foreign-currency transactions.d. Buying forward exchange contracts to cover liabilities denominated in a foreign currency
Q2-5 In the monetary approach to the balance of payments (under flexible exchange rates) an increase in the proportion of income that people in country A wish to hold as money would, other things equal, lead to _______ in country A's demand for money and to ______ of A's currency in the foreign exchange markets. a. an increase / a depreciation b. an increase / an appreciation c. a decrease / a depreciation d. a decrease / an appreciation
Question 4 Which of the following statements relating to foreign currency hedging is false? Instead of hedging with foreign currency derivatives, some companies use natural hedging by diversifying across currency zones , through operational matching of revenues and expenses, or through the use of non-derivative financial instruments. Generally, hedge accounting for foreign currency risk requires that the hedged transaction be denominated in a currency other than the hedging entity's functional currency. In the context of hedge accounting considerations, a key distinction between a forecasted transaction and a firm commitment is the certainty and enforceability of the terms of the transaction. Forward contracts are normally standardized and exchange-traded instruments, and therefore valued based on quoted market prices.
urgent no cahtgpt answer. What is the principal function of the foreign exchange market? A. To transfer purchasing power from one nation to another in exchange for currency B. To maintain fixed exchange rates that remain unaffected by market forces C. To facilitate foreign direct investment D. None of the above