Which of the following is NOT a correct statement? If a firm does not have foreign subsidiaries, it is not subject to translation exposure. With regard to hedging translation exposure, translation losses are tax deductible, and gains on forward contracts used to hedge translation exposure are taxed. Cross-hedging may involve taking a forward position in a currency that is highly correlated with the currency an MNC needs to hedge. The greater the percentage of business conducted by subsidiaries in foreign countries, the greater is the translation exposure.