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FINS5514 Lecture notes - Part IMCQs 44 a Operating exposure...

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Part I—MCQs. 44. a. Operating exposure refers to the exposure of the firm’s real assets to currency risk. True. b. A parent firm has translation exposure to the extent that unexpected changes in foreign currency values change the parent’s financial accounting statements. True. c. Translation exposure to currency risk necessarily reflects changes in the market value of the firm’s assets and liabilities. False. Accounting exposure may or may not reflect changes in market values. d. Translation exposure to currency risk is of direct concern to equity investors in the multinational corporation. False. Shareholders are concerned with cash flows and values. Translation exposure may or may not be related to value. e. Surveys reveal that financial managers believe transaction exposure is the most important currency risk exposure. True. 45 a. A freight shipper is a shipping agent used to select the best mode of transportation and arrange for a carrier to handle the physical shipment of goods. True.
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FINS5514 Lecture notes - Part IMCQs 44 a Operating exposure...

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