For years, your family has operated a business that produces lawn mowers. Over the years, the industry has progressed and new mass production techniques have been developed. However, your firm cannot afford this new technology, nor can you compete against those firms that can. Thus, the family has decided to close its facility at the end of the year. Which one of the following describes the risks to which your family's firm succumbed?
A) Forward risk
B) Volatility exposure
C) Economic exposure
D) Transactions exposure
E) Translation risk

Question

Quizplus · Accepted Answer

Economic exposure refers to the risk that a firm faces due to changes in the overall economy, which can impact its profitability, competitiveness, and ability to survive. In this scenario, the firm is unable to keep up with the new mass production techniques due to financial constraints, which puts it at a competitive disadvantage and ultimately leads to its closure. Therefore, economic exposure is the correct term to describe the risks that the family's firm succumbed to.

For Years, Your Family Has Operated a Business That Produces