II will rate you.

7. Determinants of translation exposure Suppose that Canton Co. is a U.S.-based MNC with a foreign subsidiary in Germany, which deals in euros. The local earnings of this German subsidia over a two-year period are shown in the following table, along with the weighted average exchange rate of the euro and the translated U.S. dollar earnings of the subsidiary. Suppose that Canton has no earnings from the U.S. and all of it's earnings come from the consolidated earnings from the German subsidiary. Also suppose that the price of Canton stock is approximately equal to the mean P/E ratio in the industry multiplied by Canton's EPS. With these assumptions, the Because of a in the weighted average exchange rate of the euro, the valuation of Canton's stock price