Transactions exposure is a term applied to:
A) The costs of implementing a financial engineering strategy.
B) Short-run financial risk arising from the need to buy or sell at uncertain prices in the near future.
C) Long-run financial risk arising from international trade with delayed delivery times and uncertain prices.
D) Short-term financial risk associated with permanent changes in economic fundamentals.
E) Long-term changes in commodity prices due to underlying changes in the political stability of nations.

Question

Quizplus · Accepted Answer

Transactions exposure refers to the risk companies face when they have outstanding financial obligations (payable or receivable) in a foreign currency, and the exchange rate fluctuates before the transaction is settled. This can affect the actual domestic currency amount that the company will receive or pay.

Transactions Exposure Is a Term Applied To