1. Which of the following is not true?
a. Translation exposure is the exposure of an MNC's consolidated financial statements to exchange rate fluctuations.
b. Economic exposure includes transaction exposure.
c. Economic exposure is the degree to which a firm's present value of future cash flows can be influenced by exchange rate fluctuations.
d. Transaction exposure is the degree to which the value of future cash transactions can be affected by exchange rate fluctuations.
e. All of the these choices are true.
2. Which of the following is not true regarding translation exposure?
a. Translation exposure will not affect cash flows, even if earnings are remitted to the parent.
b. Since translation of financial statements does not affect an MNC's cash flows, some analysts suggest that translation exposure is not relevant.
c. Since earnings can affect stock prices, many MNCs are concerned about translation exposure.
d. All of these choices are true.