Exposure to currency risk can be measured by the sensitivities of

Question

Quizplus · Accepted Answer

Exposure to currency risk can be measured by the sensitivities of both the future home currency values of the firm's assets and liabilities as well as the firm's operating cash flows to random changes in exchange rates. Therefore, option C is the correct answer. Option A alone is not sufficient because it does not provide information about how changes in exchange rates affect the firm's cash flows. Option B alone is also not sufficient because it does not provide information about the potential impact of currency risk on the firm's assets and liabilities.

Exposure to Currency Risk Can Be Measured by the Sensitivities