question archive A bank projects that currency translation will "depress reported revenues for the full fiscal year by 52 basis points”
A bank projects that currency translation will "depress reported revenues for the full fiscal year by 52 basis points”
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A bank projects that currency translation will "depress reported revenues for the full fiscal year by 52 basis points”. This is because
The US dollar was stronger than expected against the yen, pound, and euro.
The US dollar was weaker against the yen, pound and euro.
The bank did not have adequate hedges in place.
The bank's hedges were ineffective against rising interest rates in the US.
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Answer is Option (A): US dollar was stronger than expected against yen, pound and euro
Reason: Assuming home currency is US dollar, the translation of revenue earned by the foreign branches or units shall be decreased when that revenue earned by the units are converted to US if the exchange rate of US dollars strenghten against foreign currencies.
