Currency Risk Is Based on What Assumption

question 211

Multiple Choice

Currency risk is based on what assumption?

• A) Firms that do not continuously innovate will lose market share.
• B) Values of foreign currencies continually rise and fall in most countries.
• C) Changing product lines by reacting to every current trend may alienate the customer base.
• D) The value of one dollar today is greater than the value of one dollar to be received one year from now.
• E) The U.S. stock market fluctuates daily.

---

Definitions:

Long-Run Equilibrium

A state in a market where all adjustments have been made and all inputs, including physical capital and labor, can be varied to reach an optimal output level.

Short-Run Equilibrium

The state in which the quantity supplied equals the quantity demanded within a short time frame, often with some factors held constant.

Economic Loss

The monetary value of the decrease in welfare or trade-offs resulting from an economic transaction or decision, beyond just the physical loss.