Which of the following best describes currency risk?
A) Currency risk occurs when companies are highly indebted to other firms.
B) Currency risk can be measured by the standard deviation of operating earnings.
C) Currency risk occurs because consumer tastes are always changing, and businesses must keep their offerings current.
D) Currency risk is associated with investing in firms operating in foreign countries.
E) Currency risk is always present for corporations with multinational operations.

Question

Quizplus · Accepted Answer

One risk that is always present for corporations with multinational operations is currency risk or currency fluctuation. Changes in the relative value of one currency to another can cause profits denominated in U.S. dollars to go up or down depending on the exchange rate.

Which of the Following Best Describes Currency Risk