Operating exposure differs from transaction exposure because:
A)transaction exposure focuses on short-term and contractual cash flow while operating exposure considers all cash flow.
B)operating exposure considers only changes in exchange rates while transaction exposure considers the underlying profit in the transaction plus changes in the exchange rate.
C)transaction exposure considers only changes in exchange rates while operating exposure considers the underlying profit in the transaction plus changes in the exchange rate.
D)operating exposure focuses on short-term and contractual cash flow while transaction exposure considers all cash flow.

Question

Quizplus · Accepted Answer

Operating exposure, also known as economic exposure, encompasses all cash flows of a company, considering the long-term effect of changes in exchange rates on future cash flows and competitive position. In contrast, transaction exposure is concerned with the short-term effects of exchange rate changes on contractual cash flows.

Operating Exposure Differs from Transaction Exposure Because