You have just purchased a large number of Italian bonds,and you reside in the United States.The variability in earnings that you might experience as the relationship between the euro and the U.S.dollar fluctuates is called
A)currency volatility risk.
B)international risk.
C)exchange rate risk.
D)fluctuation risk.
E)none of the above.

Question

Quizplus · Accepted Answer

Exchange rate risk refers to the variability of earnings due to fluctuations in the exchange rate between two currencies. In this case, as the investor has purchased Italian bonds and resides in the United States, the earnings will be impacted by the relationship between the euro and the U.S. dollar, making exchange rate risk the correct choice. Currency volatility risk and fluctuation risk are not commonly used terms in finance and are not as appropriate as exchange rate risk. International risk is a broad term encompassing various risks associated with investing in foreign markets, including political risk, economic risk, and currency risk.

You Have Just Purchased a Large Number of Italian Bonds,and