Scenario - The Gayla Corporation The Gayla Corporation is a multinational business that conducts operations in twelve foreign markets. This multi-million dollar organization is very familiar with currency exchanges and has considerable understanding when it comes to the risks associated with operating in the global market arena. The Gayla Corporation claims it would not be as successful without the expertise of the financial wizards that work for it. The company has not lost money so far and plans to stay that way. When the Gayla Corporation conducts its operations in foreign markets, its customers often pay in different forms of currency. Many times there is a difference in the value of that currency received in comparison to the company's U. S. currency. Which of the following best identifies what the Gayla Corporation is experiencing?

Question

Scenario - The Gayla Corporation The Gayla Corporation is a multinational business that conducts operations in twelve foreign markets.  This multi-million dollar organization is very familiar with currency exchanges and has considerable understanding when it comes to the risks associated with operating in the global market arena.  The Gayla Corporation claims it would not be as successful without the expertise of the financial wizards that work for it. The company has not lost money so far and plans to stay that way. When the Gayla Corporation conducts its operations in foreign markets, its customers often pay in different forms of currency.  Many times there is a difference in the value of that currency received in comparison to the company's U. S. currency.  Which of the following best identifies what the Gayla Corporation is experiencing?

Quizplus · Accepted Answer

The Gayla Corporation is experiencing exchange rate risk when conducting operations in foreign markets and receiving payments in different forms of currency. This is due to the fluctuation of exchange rates, resulting in a difference in the value of the foreign currency received compared to the company's US currency. Translation risk refers to the impact of currency exchange rate changes on financial statements, while economic risk relates to the impact of macroeconomic factors on a company's cash flows. Short position refers to a situation where an investor sells securities they do not yet own in hopes of buying them back later at a lower price to make a profit. Transaction risk refers to potential losses from fluctuations in currency exchange rates during a transaction.

Scenario - the Gayla Corporation the Gayla Corporation Is a Multinational