The risk attached to financial assets whose cash flows are not denominated in U.S. dollars is called:
A) Credit risk.
B) Inflation risk.
C) Foreign-exchange risk.
D) Market risk.
E) None of the above.

Question

Quizplus · Accepted Answer

Foreign-exchange risk arises because the value of foreign-denominated cash flows can fluctuate due to changes in exchange rates, affecting the value of financial assets when converted back to U.S. dollars.

The Risk Attached to Financial Assets Whose Cash Flows Are