Exchange rate risk refers to
A)An expected drop in an exchange rate
B)A highly variable exchange rate
C)Lower profit due to an expected drop in an exchange rate
D)Lower profits due to an unexpected change in exchange rates

Question

Quizplus · Accepted Answer

Exchange rate risk refers to the potential loss an investor may face due to an unexpected change in exchange rates. This risk can occur when an investor or business operates across multiple countries and engages in transactions denominated in different currencies. A sudden change in exchange rates can impact profits and cash flows, leading to lower than expected returns.

Exchange Rate Risk Refers to