Transaction Exposure and Operating Exposure Exist Because of Unexpected Changes

question 22

Multiple Choice

Transaction exposure and operating exposure exist because of unexpected changes in future cash flows. The difference between the two is that ________ exposure deals with cash flows already contracted for, while ________ exposure deals with future cash flows that might change because of changes in exchange rates.

• A) transaction; operating
• B) operating; transaction
• C) operating; accounting
• D) none of the above

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Definitions:

Retirement Account

A financial account designed specifically for savings for retirement, often offering tax advantages.

National Labor Relations Board

A federal agency established in the United States to enforce labor laws in relation to collective bargaining and unfair labor practices.

Unfair Labor Practices

Actions by employers or unions that violate the rights of employees as defined by labor laws or labor agreements.

Compulsory Arbitration

A form of arbitration where parties are forced to resolve disputes through an arbitrator or arbitration panel rather than the courts.