Which Term Refers to the Potential for Change in Expected

question 90

Multiple Choice

Which term refers to the potential for change in expected cash flows that arises from the pricing of products and the location of investments?

• A) translation exposure
• B) transaction exposure
• C) economic exposure
• D) hedge exposure

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Definitions:

Midpoint Method

A formula used in economics to calculate the elasticity of a good or service, offering a more accurate measurement by averaging the starting and ending points.

Price Elasticity of Supply

An indicator of the extent to which the supply of a product reacts to a shift in its price.

Midpoint Method

A technique utilized in economics to calculate the percentage change between two values, minimizing the distortion from the choice of base value by using the average of the initial and final values as the base.

Inelastic Demand

A situation where the demand for a product or service is relatively unresponsive to changes in price, meaning that price increases or decreases lead to small changes in the quantity demanded.