MNCs are concerned about which of the following exchange rate exposures?

Question

Quizplus · Accepted Answer

MNCs are mainly concerned with economic exposure, which is the risk of change in future cash flows due to unexpected changes in exchange rates; and translation exposure, which is the risk of change in consolidated financial statements due to fluctuations in exchange rates. Therefore, choice B (economic exposure and translation exposure) is the best answer. Foreign exchange risk (choice D) is already included in economic exposure, and strategic risk (choice D) may not necessarily relate to exchange rate exposures. Choices A and C may be relevant concerns of MNCs, but they are not exchange rate exposures.

MNCs Are Concerned About Which of the Following Exchange Rate