The risk of deterioration in the value of a financial firm's assets as a result of fluctuating currency prices is known as:
A)basis risk.
B)country risk.
C)political risk.
D)foreign-exchange risk.
E)economic risk.

Question

Quizplus · Accepted Answer

Foreign-exchange risk refers to the risk of depreciation in the value of a financial firm's assets due to fluctuations in currency prices. This risk arises because financial firms often hold assets denominated in different currencies, and changes in exchange rates can adversely affect their value.

The Risk of Deterioration in the Value of a Financial