Economic exposure refers to:
A) the exposure of a firm's international transactions to exchange rate fluctuations.
B) the exposure of a firm's local currency value to transactions between foreign exchange traders.
C) the exposure of a firm's financial statements to exchange rate fluctuations.
D) the exposure of a firm's cash flows to exchange rate fluctuations.
E) the exposure of a country's economy (specifically GDP) to exchange rate fluctuations.

Question

Quizplus · Accepted Answer

Economic exposure refers to the exposure of a firm's cash flows to exchange rate fluctuations. It is the impact of currency fluctuations on a firm's future international cash flows and is important for firms engaged in international trade or investment. This exposure can affect the firm's profitability and cash flow performance.

Economic Exposure Refers To