TRANSACTION exposure measures gains or losses that arise from the settlement of existing financial obligations whose terms are stated in a foreign currency.

Question

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Transaction exposure refers to the risk of gains or losses resulting from the settlement of existing financial obligations that are denominated in a foreign currency. This can include things like accounts payable, receivables, loans, and other financial instruments with fixed payment terms that are not subject to change.

TRANSACTION Exposure Measures Gains or Losses That Arise from the Settlement