Firms must consider the impact of exchange rate risk if the ________ of the project are affected by exchange rate changes.

Name: Firms must consider the impact of exchange rate risk if the ________ of the project are affected by exchange rate changes.
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Question

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Cash flows are directly affected by exchange rate changes because they involve actual money coming in or going out of the firm. Revenues, costs, and capital costs may also be impacted, but they are not as directly related to cash flows as option B.

Firms Must Consider the Impact of Exchange Rate Risk If