CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

Which statement is true about the effect of exchange rates on reported sales of a non-US based subsidiary?
A. Reported sales dollars may fluctuate due to changes in exchange rates even though unit volumes remain constant.
B. The temporal method uses historical rates to translate sales and, therefore, fluctuations in exchange rates have no effect on reported dollar sales.
C. Fluctuations in exchange rates have no effect on reported dollar sales of the non-US based subsidiary
Explanation: Constant unit volumes and selling prices yield stable sales in the local currency. If exchange rates fluctuate, however, stable local currency sales will yield fluctuating $US sales.

User Contributed Comments 0

You need to log in first to add your comment.