Explain the difference between transaction risk and translation risk.
What will be an ideal response?
Transaction risk refers to the firm’s exposure to a foreign currency by entering into a transaction denominated in a foreign currency. Translation risk refers to the firm’s financial statements exposure to foreign exchange movement by having assets or liabilities denominated in a foreign currency.
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Corporations should engage in a dialogue with government agencies for all of the following reasons, except:
A) Government establishes subsidies for corporations. B) Government regulates all of the corporation's activities. C) Government introduces policy changes through taxation rates. D) Government attempts to manipulate corporate environmental records to penalize certain industries. E) Government establishes international trade agreements.
Which of the following is a true statement?
a. When arbitrary allocations are used, income statements have very little information content. b. The calculation aspects of most expense measurements are easily resolved under historical cost accounting. c. When arbitrary allocations are used, income statements still have information content. d. Capital market research has shown that the usefulness of accounting numbers is best resolved using the deductive logic of the allocation problem.
Uncertainty avoidance is more important in the United States than it is in Japan or Italy
Indicate whether the statement is true or false
The present value of a future lump sum factor is 1 +i n
. Indicate whether the statement is true or false