Transaction risk arises when a firm is committed either to pay or receive a known amount of foreign currency.

Name: Transaction risk arises when a firm is committed either to pay or receive a known amount of foreign currency.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Transaction risk is a type of foreign exchange risk that arises from a firm's obligation to make or receive payments in foreign currency. This risk arises when the foreign currency exchange rate fluctuates from the time the transaction is initiated until it is settled.

Transaction Risk Arises When a Firm Is Committed Either to Pay