1) ________ exposure deals with cash flows that result from existing contractual obligations.
2) ________ exposure measures the change in the present value of the firm resulting fromunexpected changes in exchange rates.
3) Each of the following is another name for operating exposure EXCEPT ________.
C) accounting exposure
Transaction exposure and operating exposure exist because of unexpected changes in futurecash flows. The difference between the two is that ________ exposure deals with cash flowsalready contracted for, while ________ exposure deals with future cash flows that might changebecause of changes in exchange rates.
) transaction; operating
5) ________ exposure is the potential for accounting-derived changes in owner's equity to occurbecause of the need to translate foreign currency financial statements into a single reportingcurrency.
D) Accounting (aka translation)
6) Losses from ________ exposure generally reduce taxable income in the year they are realized.________ exposure losses may reduce taxes over a series of years.
C) transaction; Operating
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