Exchange Rate Risk of a Foreign Currency Payable Is an Example

question 88

Multiple Choice

Exchange rate risk of a foreign currency payable is an example of

• A)transaction exposure.
• B)translation exposure.
• C)economic exposure.
• D)none of the above

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Definitions:

Average Operating Assets

A metric representing the average value of the assets involved in the operating activities of a business over a period.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, indicating the amount contributing to covering fixed costs and generating profit.

Fixed Costs

Fixed costs refer to business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

ROI

Return on Investment, a performance metric used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.