- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 13. Multinational Operations
- Subject 1. Effects of Exchange Rate Changes
CFA Practice Question
Accounting (translation) exposure relates to:
B. The risk that fluctuations in foreign exchange rates will cause a loss on the conversion of an asset into $US.
C. Cash gains (losses) arising from the conversion of non-$US denominated asset into $US.
A. The potential that a fraud has occurred and is undetected.
B. The risk that fluctuations in foreign exchange rates will cause a loss on the conversion of an asset into $US.
C. Cash gains (losses) arising from the conversion of non-$US denominated asset into $US.
Correct Answer: B
Translation relates to the reporting of non-$US denominated financial statement into $US for reporting purposes. The translation exposure is the risk that fluctuations in foreign exchange rates will give rise to translation gains (losses) either in current income or in other comprehensive income.
User Contributed Comments 2
| User | Comment |
|---|---|
| davidt876 | you guys should really replace "$US" with "the company's reporting currency" |
| ashish100 | You should really be thankful to the US and acknowledge its greatness |