Exchange rate risk of a foreign currency payable is an example of
A)transaction exposure.
B)translation exposure.
C)economic exposure.
D)none of the options

Question

Quizplus · Accepted Answer

Transaction exposure refers to the risk that arises from the fluctuation in exchange rates between the time an international transaction is initiated and the time it is settled. In this case, the foreign currency payable exposes the company to transaction exposure as the exchange rate may change between the time the payment is due and the actual payment.

Exchange Rate Risk of a Foreign Currency Payable Is an Example