Firms engaged in international transactions incur ____ risk because of fluctuations in the exchange rates among currencies.

Question

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Firms engaged in international transactions face exchange rate risk, which refers to the possibility that the exchange rate between two currencies may change unfavorably before the transaction is completed. This can impact the firm's revenue, expenses, and profits. Credit risk relates to the possibility that a borrower may default on their debt obligation, political risk concerns the potential impact of political events or instability on a firm's investments or operations, and market risk refers to the possibility of loss due to fluctuations in the overall market.

Firms Engaged in International Transactions Incur ____ Risk Because of Fluctuations