1) The foreign subsidiary of a U.S. firm is profitable when profits are measured in the foreign currency but those profits become losses when measured in U.S. dollars. This is an example of which one of the following?
Political risk associated with the foreign operations
Interest rate disparities
Short-run exposure to exchange rate risk
Long-run exposure to exchange rate risk
Translation exposure to exchange rate risk
2) An agreement to exchange currencies sometime in the future is referred to as which one of the following?
Hedge
Forward trade
Gilt
Spot trade
Forward exchange rate