Change in the Value of Future Cash Flows Due to Unexpected

question 2

Multiple Choice

Change in the value of future cash flows due to unexpected changes in exchange rates is called _______ to currency risk.

• A) economic exposure
• B) operating exposure
• C) transaction exposure
• D) translation exposure
• E) None of the above

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Definitions:

Automobiles

Self-propelled vehicles designed for transport on public roads, commonly referred to as cars.

Cents Per Mile

An IRS-allowed method of calculating deductions for business vehicle expenses based on miles driven.

Net Investment Income

The total income received from investment assets, like stocks and bonds, minus related expenses.

Investment Interest Expense

The interest paid on money borrowed to purchase taxable investments, which can be deducted up to the amount of net investment income.