Transaction exposure measures the changes in the value of contractually binding outstanding foreign-currency obligations:
A) acquired after exchange rate changes.
B) acquired before exchange rate changes.
C) realised before the outstanding obligation is settled.
D) that must be settled before economic exposure is established.

Question

Quizplus · Accepted Answer

Transaction exposure refers to the risk companies face when they have outstanding obligations (such as payables or receivables) in a foreign currency and the exchange rate changes after these obligations have been incurred but before they have been settled.

Transaction Exposure Measures the Changes in the Value of Contractually