Economic exposure is based on the extent to which the ______ of the firm will change when exchange rates change.

Question

Quizplus · Accepted Answer

Economic exposure is the risk faced by a firm due to changes in exchange rates, which can impact its value, leading to changes in the cash flows and profitability of the firm. Thus, the best choice is A - value, as it captures the essence of economic exposure. Current assets and long-term liabilities are part of a firm's balance sheet and do not necessarily reflect the firm's exposure to exchange rate risks, while competitive advantages could be impacted by economic exposure but do not directly refer to it.

Economic Exposure Is Based on the Extent to Which the ______