The responses will be 3 pages (typed) in length.
1. You’ve heard your professor state that Translation risk and related Translation adjustments are accounting entries and may not be accorded much significance by some companies even if the dollar impacts are material.
a. What is Translation risk and why might companies look at it differently?
b. Assuming a company is concerned about it what potentially strategy or strategies could you recommend mitigating the exposure?
2. Assume you are in the manufacturing business here in the US, and your Company exports most of its products overseas. Assume the US Dollar strengthens against many of the key the currencies of the countries into which you sell your products, and that seems to be a condition that will exist for some time.
a. How might that exchange rate move impact your Company and why would that be so?
b. What long term strategy might help your Company mitigate the impacts of the exchange rate shift and why might it be effective?