Firms have,in varying degrees,three types of foreign currency exposure:
A)Natural exposure,economic exposure,and capital exposure
B)Transaction exposure,economic exposure,and translation exposure
C)Capital exposure,transaction exposure,and economic exposure
D)Natural exposure,capital exposure,and transaction exposure
E)Transaction exposure,natural exposure,and capital exposure

Question

Quizplus · Accepted Answer

The three types of foreign currency exposure are transaction exposure (resulting from actual transactions in foreign currencies), economic exposure (resulting from the impact of currency fluctuations on a firm's future cash flows and competitive position), and translation exposure (resulting from the need to translate financial statements of foreign subsidiaries into the parent company's reporting currency).

Firms Have,in Varying Degrees,three Types of Foreign Currency Exposure