A Western European firm is contemplating countering the strengthening of the Euro currency by making investments in developing nations with weakening currency situations. This is management of:
A) Transaction risks
B) Economic risks
C) Translation risks

Question

Quizplus · Accepted Answer

Economic risks involve changes in the macroeconomic conditions that can affect a company's financial performance, such as currency fluctuations. By investing in countries with weakening currencies, the firm aims to counterbalance the impact of a strengthening Euro on its international purchasing power and costs, which is a strategy to manage economic risks.

A Western European Firm Is Contemplating Countering the Strengthening of the Euro