Exchange Rate Risk

question 64

Multiple Choice

Exchange rate risk

• A) exists when the contract is written in terms of the foreign currency.
• B) exists also in direct foreign investments and foreign portfolio investments.
• C) does not exist if the international trade contract is written in terms of the domestic currency.
• D) all of the above.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenue, representing the company's bottom line.

Contingent Liabilities

Contingent liabilities are potential liabilities that may arise depending on the outcome of a future event.

Natural Disasters

Severe and sudden natural events caused by environmental factors that can result in substantial damage and pose significant risks to life, property, and economic stability.

Future Events

Prospective occurrences or situations that have not yet happened but may affect an entity's operations or financial performance in subsequent periods.