​Which of the Following Is an Example of Economic Exposure

question 17

Multiple Choice

​Which of the following is an example of economic exposure but not an example of transaction exposure?

• A) ​An increase in the dollar's value hurts a U.S. firm's domestic sales because foreign competitors are able to increase their sales to U.S. customers.
• B) ​An increase in the pound's value increases a U.S. firm's cost of British pound payables.
• C) ​A decrease in the peso's value decreases a U.S. firm's dollar value of peso receivables.
• D) ​A decrease in the Swiss franc's value decreases the dollar value of interest payments on a Swiss deposit sent to a U.S. firm by a Swiss bank.

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Definitions:

Priority

Priority indicates the level of importance or precedence given to an issue, task, or project over others.

Security Interest

A legal claim or lien on assets, which secures the payment of a debt or performance of some other obligation by the property owner.

Perfected

In legal and financial contexts, it refers to the completion of all necessary legal steps to validate a security interest against third parties.

Security Agreement

A legal contract in which a borrower pledges an asset as collateral for a loan, securing the interest of the lender.