1. Which of the following is a result of consolidating financial statements from each subsidiary's financial data and reporting them in the parent company's local or reporting currency?

A) Translation Exposure

B) Transaction Exposure

C) Transactional Exposure

D) Economic Exposure

2. A start-up team led by its CEO Seo Dal-Mi and her boyfriend CTO Nam Do-San is analyzing the dataset on economic indicators relating to the Korean Won (KRW). They developed an AI system that automatically trades KRW with any other currency in less than a split second. Nam Do-San believes that this can be done by only incorporating the differences in inflation rates across countries. Which of the following is most likely the result of the AI system?

A) The AI system will fail since inflation alone cannot forecast exchange rate movements.

B) The AI system will work since this has already been proven by the Purchasing Power Parity.

C) The AI system will work since this is supported by both the Purchasing Power Parity and the International Fischer Effect.

D) The AI system will fail since inflation should never be used as an input in determining exchange rates due to its unpredictability and volatility.