Exchange rate risk is the the risk that an unexpected change in exchange rates will reduce the market value of a project's cash flows.

Question

Quizplus · Accepted Answer

Exchange rate risk refers to the possibility of unexpected fluctuations in exchange rates that may result in a reduction in the value of cash flows associated with a project. This risk is a significant concern for businesses that operate across borders or invest in foreign markets. Therefore, the given statement is true.

Exchange Rate Risk Is the The Risk That an Unexpected