Tiger Importers buys goods from the Far East on credit terms of net 45. Because of the delay in payment, Tiger has ______ exposure to exchange rate risk.

Question

Quizplus · Accepted Answer

Short-run exposure to exchange rate risk occurs because the value of future cash flows can fluctuate due to changes in exchange rates during the period from the time the credit terms are agreed upon until the payment is made, which in this case is within 45 days.

Tiger Importers Buys Goods from the Far East on Credit