________ exposure is the most commonly observed type of exchange rate risk.
A)Transaction
B)Translation
C)Economic
D)Capital
E)Natural

Question

Quizplus · Accepted Answer

Transaction exposure is the most commonly observed type of exchange rate risk. It refers to the risk of exchange rate fluctuations on a firm's contractual cash flows, such as those resulting from imports or exports. Translation exposure refers to the impact of exchange rate fluctuations on a firm's financial statements, while economic exposure refers to the impact of exchange rate fluctuations on a firm's overall value. Capital and natural exposure are not commonly used terms in the context of exchange rate risk.

________ Exposure Is the Most Commonly Observed Type of Exchange