The following describes a long-run exposure of exchange rate risk. Your ﬁrm has subsidiaries
throughout the world. Due to the recent depreciation of the dollar against most foreign currencies,
the dollar value of your foreign sales has declined as reﬂected on the parent's ﬁnancial statements,
even though sales growth is strong.

Question

Quizplus · Accepted Answer

The scenario describes a short-run exposure of exchange rate risk, as it focuses on the immediate impact of currency depreciation on financial statements rather than long-term strategic impacts.

The Following Describes a Long-Run Exposure of Exchange Rate Risk