Consider the Following Statements

question 53

Multiple Choice

Consider the following statements:
i.'Transaction exposure' refers to the risk that in the long run a company's net present value may be affected by future changes in the foreign exchange rate.
ii.Foreign exchange 'economic' risk exposure is a measure of the effect that a change in the exchange rate will have on the value of a company's worth.
iii.Foreign exchange risk implies that every change in the exchange rate will have detrimental effects on the home currency value of a company's foreign currency assets,liabilities and transactions.
iv.A company's board of directors is responsible for establishing policy in relation to the measurement and management of FX risk exposures within the company.
v.If an Australian-based company has a USD 1 million payable and a USD 1 million receivable,both due on 1 July next year,it is not exposed to FX risk.
How many of these statements are true and how many are false?

• A) 1 statement is true and 4 are false
• B) 2 statements are true and 3 are false
• C) 3 statements are true and 2 are false
• D) 4 statements are true and 1 is false

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Definitions:

Insurance

A financial product sold by insurance companies to safeguard against financial loss or damage.

Human Dignity

The inherent value and worth of each individual, which deserves respect and ethical treatment.

Active Listening

The practice of fully concentrating, understanding, responding, and remembering what is being said during communication.

Responding Compassionately

Acting with sensitivity, empathy, and kindness towards the feelings and needs of others.