Foreign exchange risk may relate to:
A) recognised assets and liabilities.
B) planned foreign currency transactions.
C) unrecognised firm commitments.
D) all of the above.

Question

Quizplus · Accepted Answer

Foreign exchange risk may relate to all of the above – recognised assets and liabilities, planned foreign currency transactions, and unrecognised firm commitments. Recognised assets and liabilities are subject to changes in exchange rates, which can affect their value in the company's functional currency. Planned foreign currency transactions, such as purchases or sales, may also be affected by changes in exchange rates between the transaction date and settlement date. Unrecognised firm commitments are agreements to buy or sell goods or services at a fixed price in a foreign currency, which may result in losses if exchange rates change before the transaction is completed.

Foreign Exchange Risk May Relate To