Question
Transaction Exposure vs Translation Exposure
Answer :
Word Count : 191
| Basis of Difference | Transaction Exposure | Translation Exposure |
|---|---|---|
| Meaning | Risk arising from changes in exchange rates affecting specific foreign currency transactions. | Risk arising from exchange rate changes while converting financial statements of foreign subsidiaries into parent company currency. |
| Impact Area | Affects actual cash flows. | Affects reported financial statements, not actual cash flows directly. |
| Arises When | There are receivables, payables, loans, or contracts denominated in foreign currency. | Financial statements of foreign operations are consolidated. |
| Time Period | Exists between the date of transaction and date of settlement. | Exists at the time _____ ____ ___ __________ ____ _________ _________. _______ _____ ______ _____ ______ _______. _____ _________ _____ _____ ___ __________ _____ ________. ___ ________ ______ _______ _______ ______. ___ ___ _________ _____ _____ ____ ___ _____. ____ ______ _______ _________ ______ ________ _______ _____ ________. ________ ___ ___ _____ _____ __________ ________ ____. ______ ________ _________ ______ _____ ______ __________ __________. ________ __________ _________ _____ _________ _____ __________ ___ ____. ____ ________ ______ _________ ______ ______ ______ _________. ______ ______ _______ ____ _________ ________ _________ _________ _____ ___ _________ __________. ________ ___ __________ ______ ________ _________ _____ ________. ________ __________ _________ ______ ________ _____. _________ ____ ____ _____ _______ ____ ________ ___. __________ _____ ____ __________ _____ ______. IGNOU ACADEMY Your IGNOU journey, made easier.
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