________ exposure may result from a firm having a payable in a foreign currency.
A) Transaction
B) Accounting
C) Operating
D) None of the above

Question

Quizplus · Accepted Answer

Transaction exposure refers to the risk that arises from the effect of exchange rate fluctuations on a firm's future cash transactions. Having a payable in a foreign currency is an example of such future cash transactions that create transaction exposure. Accounting exposure refers to the impact of exchange rate fluctuations on a firm's financial statements, and operating exposure refers to the effect of exchange rate changes on a firm's present or future operations. None of these exposures are relevant in this scenario except transaction exposure.

________ Exposure May Result from a Firm Having a Payable