1. An exporter faced with exposure to an appreciating currency can reduce transaction exposure with a strategy of

paying or collecting early.

paying or collecting late.

paying late, collecting early.

paying early, collecting late.

2. Which of the following is not true?

Translation exposure is not currency specific; rather, it is entity specific.

In managing translation exposure, the balance sheet hedge is to eliminate the mismatch between net assets and net liabilities denominated in the same currency.

The actual translation process prescribed by FASB 52 is a two-stage process.

Using a derivatives hedge to control translation exposure involves speculation about foreign exchange rate changes, and exposes a firm with transaction exposure, however.