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 that a company's cash flows, profitability, and ultimately, its value will be affected by fluctuations in foreign currency exchange rates. Therefore, the extent to which the value of the firm will change when exchange rates change is the most relevant factor in determining economic exposure.

Economic Exposure Is Based on the Extent to Which the ______