Operating Exposure

question 51

Multiple Choice

Operating exposure

• A) creates foreign exchange accounting gains and losses.
• B) causes exchange rates to fluctuate.
• C) is the possibility that future cash flows will change due to an unexpected change in foreign exchange rates.
• D) measures a country's propensity to import and export.

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Definitions:

Net Profit

The amount of income that remains after subtracting all expenses, taxes, and costs from revenue.

Exercise Price

The exercise price is the preset price at which the holder of an option can buy (call option) or sell (put option) the underlying security or commodity.

Market Price

The present rate at which a commodity or service is available for purchase or sale in the marketplace.

Binomial Model

An option-valuation model predicated on the assumption that stock prices can move to only two values over any short time period.