Exchange rate risk exists in international trade contracts denominated in a foreign currency,but not in foreign portfolio investments,because the returns on investment securities are adjusted automatically for differences in exchange rates.

Question

Quizplus · Accepted Answer

Foreign portfolio investments are subject to exchange rate risk because the value of the investments can fluctuate based on changes in exchange rates. The returns may not be adjusted automatically for these differences.

Exchange Rate Risk Exists in International Trade Contracts Denominated in a Foreign