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