Which of the following best describes economic exposure?
A) The sensitivity of the domestic currency value of future operating income to unexpected changes in exchange rate.
B) The risk of operating in politically risky countries.
C) When a business leaves only one branch to operate in a foreign country.
D) Exposure from uncertainty about the currency value of a foreign-denominated transaction to be fulfilled in the future.

Question

Quizplus · Accepted Answer

Economic exposure refers to the sensitivity of a company's future operating income to unexpected changes in exchange rates. This exposure is often related to companies that operate in multiple countries and have transactions denominated in different currencies. Economic exposure can impact a company's competitiveness, as it can affect its profits, costs, and the value of its assets and liabilities.

Which of the Following Best Describes Economic Exposure