Question by John H: Which of the following firms is not exposed to translation exposure?
Which of the following firms is not exposed to translation exposure?A) firm X, with a fully owned subsidiary that periodically remits earnings generated in Great Britainto the U.S.established parent.B) firm Y, with a fully owned subsidiary that periodically generates alien losses in Sweden; theparent covers at least some of these losses.C) firm Z, with a fully owned subsidiary that generates wholesome earnings in Germany; thesubsidiary never remits earnings but reinvests them in Germany.D) all of these firms are exposed to translation exposure.
Answer by Caliban
D. since all, will at some point, deal with exchange rate changes. In all cases, earnings of all subsidiaries impact the home firm’s profitability statement
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