Which of the Following Statements Is Incorrect

question 34

Multiple Choice

Which of the following statements is incorrect?

• A) Transaction exposure represents only the exchange rate risk when converting net foreign cash inflows to U.S. dollars or when purchasing foreign currencies to send payments.
• B) Economic exposure represents any impact of exchange rate fluctuations on a firm's future cash flows.
• C) Firms can simply focus on hedging their foreign currency payables and/or receivables to hedge economic exposure.
• D) The management of economic exposure tends to serve as a long-term solution rather than just a short-term solution.

---

Definitions:

Corporate Culture

The shared values, beliefs, ethics, and practices that characterize an organization and guide its employees' behavior.

Environmental Opportunities

Circumstances in the external environment that a business can leverage to its advantage for growth or improvement.

Product Life Cycle

Product life cycle is the series of stages a product or service goes through in the ‘life’ of its marketability.

Defender Strategies

Approaches used by organizations to protect their existing market share by improving efficiency and product quality, while not seeking to aggressively expand.