Transaction Exposure Is Defined As

question 8

Multiple Choice

Transaction exposure is defined as:

• A) the sensitivity of realized domestic currency values of the firm's contractual cash flows denominated in foreign currencies to unexpected exchange rate changes,
• B) the extent to which the value of the firm would be affected by unanticipated changes in exchange rates,
• C) the potential that the firm's consolidated financial statement can be affected by changes in exchange rates,
• D) ex post and ex ante currency exposures,

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Definitions:

Potentially Efficient

A condition indicating that a system or process could achieve maximum productivity with minimum waste or expense, but hasn't yet done so.

Consumer Surplus

The gap between the amount customers are prepared to spend on a product or service and the amount they end up paying.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive.

P = MC

An economic principle stating that the optimal level of output occurs when the price (P) equals marginal cost (MC), guiding firms in perfect competition on production decisions.