The risk associated with changes in the dollar value of foreign financial assets is which of the following?
A)exchange rate risk
B)default risk
C)liquidity risk
D)interest rate risk

Question

Quizplus · Accepted Answer

Changes in the dollar value of foreign financial assets are related to exchange rate risk, which refers to the risk of fluctuations in the value of currencies between the time an investment is made and the time it is liquidated. Default risk refers to the risk of a borrower failing to make payments on a debt obligation, while liquidity risk refers to the risk of not being able to sell an asset quickly enough to meet financial needs. Interest rate risk refers to the risk of changes in interest rates affecting the value of an investment.

The Risk Associated with Changes in the Dollar Value of Foreign