Which of the Following Is Concerned with the Effect of Exchange

question 34

Multiple Choice

Which of the following is concerned with the effect of exchange rate changes on individual transactions, most of which are short-term affairs that will be executed within a few weeks or months?

• A)Purchasing power parity
• B)Transaction exposure
• C)Economic exposure
• D)Translation exposure
• E)Currency speculation

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Definitions:

Foreign Exchange Gain

A financial benefit that occurs when the value of foreign currencies increases against the domestic currency in which a company holds foreign currency assets or earnings.

Exchange Rate

The exchange rate is the value of one currency for the purpose of conversion to another, dictating how much of one currency can be exchanged for another currency.

Accounts Receivable-Kagome

This term might refer to the outstanding invoices or money owed to the Kagome company by its customers for goods or services delivered.

Foreign Exchange Rate

The price at which one currency can be exchanged for another currency.