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NEW QUESTION: 1
Universal Industries limits its operations to exports to foreign countries. What can be said about
Universal's exposures to exchange rate risk?
A. Universal is subject transaction and translation exposures to exchange rate risk.
B. Universal is subject to economic and translation exposures to exchange rate risk.
C. Universal is subject to potential transaction, economic and translation exposures to exchange rate risk.
D. Universal is subject to potential transaction and economic exposures to exchange rate risk.
Answer: D
Explanation:
Choice "b" is correct. Universal is subject to transaction risks associated with settlement of export
transactions and is subject to economic risks associated with the satisfaction of domestic expenses
denominated in domestic currencies with imported revenues denominated in a foreign currency. No
translation exposure exists since there is no foreign investment or subsidiary. Choices "a", "c", and "d" are
incorrect, per the above Explanation: .
NEW QUESTION: 2
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A. True
B. False
Answer: B
NEW QUESTION: 3
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