The foreign subsidiary of a U.S. firm is profitable when profits are measured in the foreign currency but those profits become losses when measured in U.S. dollars. This is an example of which one of the following?  A.  Interest rate disparities   B.  Short-run exposure to exchange rate risk   C.  Long-run exposure to exchange rate risk   D.  Political risk associated with the foreign operations   E.  Translation exposure to exchange rate risk

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter17: Multinational Capital Structure And Cost Of Capital
Section: Chapter Questions
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The foreign subsidiary of a U.S. firm is profitable when profits are measured in the foreign currency but those profits become losses when measured in U.S. dollars. This is an example of which one of the following? 

A. 

Interest rate disparities

 

B. 

Short-run exposure to exchange rate risk

 

C. 

Long-run exposure to exchange rate risk

 

D. 

Political risk associated with the foreign operations

 

E. 

Translation exposure to exchange rate risk

 

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