The Phenomenon Where the Profitability of the Firm Is at Risk

question 32

Multiple Choice

The phenomenon where the profitability of the firm is at risk due to real exchange rate change is known as ________ exposure.

• A) translation
• B) sovereign risk
• C) operating
• D) accounting

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Definitions:

Incorporate

To incorporate is to legally form a corporation by filing required documents with a governmental entity, granting the company distinct legal status from its owners.

Unlimited Liability

The liability of the sole proprietor or the partners for all debts incurred by the business to the extent of their personal resources.

Sole Proprietorship

A business owned and operated by a single individual, where there is no legal distinction between the owner and the business entity.

Incorporated

A legal process whereby a business entity is formed as a distinct legal entity, separate from its owners, with its own rights and liabilities.