Elaborate on the temporal method of translation FE exposure. Define it and describe how it treats balance sheet, income statement and stockholders equity items.

Transaction and Translation exposure

INSTRUCTIONS.

I. MUST NEED YOUR CONVICTION, CORRECTNESS, ELABORATION AND ELUCIDATION OF YOUR ANSWERS.
II. MUST BE SINGLE-SPACED AND 1 FULL-PAGE ESSAY FOR EACH QUESTION. WRITE A MINIMUM OF 3 PLUS PARAGRAPHS FOR EACH ESSAY.
III. You must read and follow this TEXT book for most of your answer: Eiteman, D. K., Stonehill, A. I., Moffett, M. H., & Kwok, C. (2022) MULTINATIONAL BUSINESS FINANCE 16th ed., Pearson. READ CHAPTER 10,11,12
IV. KEENLY OBSERVE THE INSTRUCTION AND USE PROPER CITATION

ESSAYS

*A. We fear a revaluation of the currency of the US affiliate the Japanese Yen.
1) Explicate how the USA should hedge its translation exposure through a balance sheet or forward hedge.
2) Discuss the implications of US hedging actions.
C. Elaborate on the temporal method of translation FE exposure. Define it and describe how it treats balance sheet, income statement and stockholders equity items.
D. Expound on the current rate method of FE exposure. Define it and describe how it treats income statement, balance sheet and stockholders equity items.
E. Explicate hedging translation exposure through the balance sheet and forward in the current rate and the temporal method. Evaluate them as a hedging tool.

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