Transaction exposure reflects:
A) the exposure of a firm's ongoing international transac tions to exchange rate fluctuations.
B) the exposure of a firm's local currency value to transac tions between foreign exchange traders.
C) the exposure of a firm's financial statements to exchange rate fluctuations.
D) the exposure of a firm's cash flows to exchange rate fluctuations.

Question

Quizplus · Accepted Answer

Transaction exposure refers to the risk that a company's financial obligations or receivables that are denominated in a foreign currency will be affected by fluctuations in exchange rates. It arises from ongoing international transactions such as imports, exports, and foreign investments. Therefore, option A best explains transaction exposure.

Transaction Exposure Reflects