Long-term ﬁnancial risk arising from permanent changes in prices or other market fundamentals is called ___________________.

Question

Quizplus · Accepted Answer

Economic exposure refers to the long-term financial risk arising from permanent changes in prices or other market fundamentals. The other options are incorrect. Risk maximization and volatility maximization refer to strategies aimed at increasing risk or volatility, respectively. Transactions exposure refers to the risk of financial loss arising from the fluctuation of exchange rates between the time a transaction is agreed upon and the time it is settled. Translation exposure refers to the risk of financial loss arising from changes in exchange rates when foreign currency financial statements are translated into the home currency.

Long-Term ﬁNancial Risk Arising from Permanent Changes in Prices or Other