Arlington Co. has substantial translation exposure in European subsidiaries. The treasurer of Arlington Co. suggests that the

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Arlington Co. has substantial translation exposure in European subsidiaries. The treasurer of Arlington Co. suggests that the translation effects are not relevant because the earnings generated by the European subsidiaries are not being remitted to the U.S. parent, but are simply being reinvested in Europe. Nevertheless, the vice president of finance of Arlington Co. is concerned about translation exposure because the stock price is highly dependent on the consolidated earnings, which are dependent on the exchange rates at which the earnings are translated.

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