Change in the value of contractual cash flows due to unexpected changes in currency values is called ______ to currency risk.
A) economic exposure
B) operating exposure
C) transaction exposure
D) translation exposure
E) None of the above

Question

Quizplus · Accepted Answer

The change in value of contractual cash flow due to unexpected changes in currency is called transaction exposure. Economic exposure refers to the impact of unexpected changes in exchange rates on future cash flows, while operating exposure refers to the impact of exchange rate changes on a company's operating cash flows. Translation exposure refers to the impact of exchange rate changes on the translation of a foreign subsidiary's financial statements into the parent company's currency.

Change in the Value of Contractual Cash Flows Due to Unexpected