• 一、Single Choice
• 1. Which of the following translation method is single rate method? (B) • A Temporal method • B. Current rate method • C. Monetary/non-monetary method • D. Current/non-current method • • 2. ( ) views monetary assets and liabilities exposed to the same exchange exposure. (B) • A. Current rate method • B. Monetary/non-monetary method • C. Current/non-current method • D. Temporal method
• 3. In foreign currency translation methods, which methods translate Balance sheet at first? (BCD ) • A. Current rate method • B. Monetary/non-monetary method • C. Current/non-current method • D. Temporal method • E. Historic rate method
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二、Multiple Choice
• 1. Which translation methods put foreign translation gains or losses in Income Statement? • ( BCD ) • A. Current rate method • B. Monetary/non-monetary method • C. Current/non-current method • D. Temporal method • E. Historic rate method
• 7. Which of the following situations can arise transaction exposure ? (ABCDE ) • A. Borrowing funds in a foreign currency. • B. Engaging in contracts to buy or sell foreign currency at a future date. • C. Buying on credit goods or services whose prices are contractually denominated in foreign currencies. • D. Selling on credit goods or services whose prices are contractually denominated in foreign currencies. • E.Lending funds in a foreign currency.

• 4. Foreign currency transaction includes ( ABCD) • A. spot transaction • B. forward contract • C. currency option • D. currency swap • E. currency translation.
• 2. Please write down the concept of foreign exchange exposure and its’ three kinds. • A measure of the potential for a firm’s profitability, cash flow, and market value to change because of a change in exchange rates • Translation exposure • Transaction exposure • Economic exposure
• 9. Currency option is a contract that provides the right but not the obligation to trade a foreign currency at a set exchange rate after a given date. (F )
• 2. Currency option is a contract that provides the right and the obligation to trade a foreign currency at a set exchange rate on or before a given date in the future. •( F )
• 5.There are three types of foreign exchange exposure,They are ( ACD ) • A. Translation exposure • B. Exchange rate exposure • C. Transaction exposure • D. Economic exposure • E. Foreign currency exposure
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5. Which of the followings is a non-monetary item? (D ) A. Cash B. Accounts payable C. Notes receivable D. Equipment 6. Under SFAS NO.52, the temporal method of translation is used when (C ). A. The local currency is the functional currency B. The local currency is the reporting currency C. The parent’s currency is the functional currency D. The parent’s currency is the reporting currency
• 四、Brief Answer • 1. What’s the definition for a Functional Currency in FASB Statement No.52? What are the three circumstances that a Functional Currency been Chosen (regarding which country the functional currency belongs to)? And what translation method should be used in each circumstance? • Functional Currency is the currency of the primary economic environment in which the foreign subsidiary operates and generates cash flows. • 1) the Local Currency is the functional currency Current Rate Method. • 2) the Parent’s Currency is the functional currency Temporal Method • 3) Currency of a third country is the functional currency, a two-step translation process: Local currency to the functional currency using the temporal method; the functional currency to the parent currency using the current rate method.
• 3. Under SFAS NO.52, the primary currency in which a company conducts its business is called • ( B ). • A. Core currency • B. Functional currency • C. Hard currency • D. Convertible currency • • 4. A forward contract is an agreement to • ( C ). • A. Buy a foreign currency in the future at a variable rate • B. Sell a foreign currency in the future at a set rate • C. Buy or sell a foreign currency in the future at a set rate • D. None of the above
• 6. Which of following foreign exchange exposures are not included in transaction exposure? ( CE ) • A. Billing exposure • B. Quotation exposure • C. Translation exposure • D. Backlog exposure • E. Economic exposure
• 3. Bid rate is the price at which a financial institution is willing to sell a currency. • ( F )