The __________ the percentage of an MNC's business conducted by its foreign subsidiaries, the _________ the percentage of a given financial statement item that is susceptible to translation exposure.

Related MCQs

• With regard to hedging translation exposure, translation losses _______; and gains on forward contracts used to hedge translation exposure _______.
• Assume a UK firm uses a forward contract to hedge all of its translation exposure. Also assume that the firm underestimated what its foreign earnings would be. Assume that the foreign currency depreciated over the year. The firm would generate a translation _______, which would be _______ than the gain generated by the forward contract.
• In general, MNCs probably prefer to use ____________ foreign debt when their foreign subsidiaries are subject to potentially ___________ local currencies.
• When the dollar strengthens, the reported consolidated earnings of U.S. based MNCs are _______ affected by translation exposure. When the dollar weakens, the reported consolidated earnings are __________ affected.
• Translation exposure reflects:
• A perfect hedge (full coverage) on translation exposure can usually be achieved when:
• Multinational firms face exposure to many different types of international risk. Which of the following is not a type of exposure?
• As opposed to transaction exposure, managing economic exposure involves developing a ________ solution.
• The potential effect of exchange rate fluctuations on foreign direct investment is expressed as _____ exposure.
• An argument for MNCs to have a debt-intensive capital structure is: