Economic exposure can best be defined as:
A) Reducing a firm's exposure to price or rate fluctuations
B) A financial asset that represents a claim to another financial asset.
C) A plot showing how the value of the firm is affected by changes in prices or rates.
D) Short-run financial risk arising from the need to buy or sell at uncertain prices or rates in the near future.
E) Long-term financial risk arising from permanent changes in prices or other economic fundamentals.

Question

Quizplus · Accepted Answer

Economic exposure refers to the long-term financial risk that a company faces due to changes in exchange rates, interest rates, inflation, and other economic factors. It affects the firm's future cash flows and market value over the long term, distinguishing it from short-term transactional or operational exposures.

Economic Exposure Can Best Be Defined As