Which of the following represents a source of foreign exchange risk exposure?
A) Economic exposure
B) Transaction exposure
C) Translation exposure
D) All of the given choices

Question

Quizplus · Accepted Answer

All three types of exposures - economic, transaction and translation - represent sources of foreign exchange risk exposure. Economic exposure is the risk of financial performance being affected by changes in exchange rates, transaction exposure relates to the risk of loss from exposure to fluctuations in exchange rates, and translation exposure is related to the revaluation of foreign assets and liabilities denominated in different currencies. Therefore, none of the options can be excluded as a source of foreign exchange risk exposure.

Which of the Following Represents a Source of Foreign Exchange