For years,your family has operated a business that produces lawn mowers.Over the years,the industry has progressed and new mass production techniques have been developed.However,your firm cannot afford this new technology,nor can you compete against those firms that can.Thus,the family has decided to close its facility at the end of the year.Which one of the following describes the risks to which your family's firm succumbed?
A)forward risk
B)volatility exposure
C)economic exposure
D)transactions exposure
E)translation risk

Question

Quizplus · Accepted Answer

Economic exposure refers to the risks that arise from the impact of exchange rate fluctuations and other unforeseen economic events on a company's future cash flows, profitability, and overall value. In this scenario, the family's firm is unable to keep up with changing industry trends and adopt new mass production techniques, which results in reduced profitability and eventual closure of the facility. This highlights the economic exposure that the firm faced, as it was unable to adapt to changing market conditions and technological advancements.

For Years,your Family Has Operated a Business That Produces Lawn