It is conventional to classify foreign currency exposures into the following types:

Question

Quizplus · Accepted Answer

The correct classification of foreign currency exposures includes economic exposure (resulting from changes in exchange rates affecting the present and future cash flows of a firm), transaction exposure (resulting from contractual monetary obligations denoted in currencies other than the domestic currency), and translation exposure (resulting from the conversion of foreign currency financial statements into the domestic currency for reporting purposes). None of the other options listed are accurate classifications.

It Is Conventional to Classify Foreign Currency Exposures into the Following