For the purpose of translation exposure, historical rate is the rate prevalent on the date

A. The parent company was established

B. The foreign subsidiary was established

C. The investment in the subsidiary was made by the parent company

D. The asset was acquired or the liability was incurred

Answer: Option D

Solution(By Examveda Team)

For the purpose of translation exposure, historical rate is the rate prevalent on the date of the asset was acquired or the liability was incurred. Translation exposure (also known as translation risk) is the risk that a company's equities, assets, liabilities or income will change in value as a result of exchange rate changes. This occurs when a firm denominates a portion of its equities, assets, liabilities or income in a foreign currency.