The Possibility of Experiencing a Drop in Revenue or an Increase

question 56

Multiple Choice

The possibility of experiencing a drop in revenue or an increase in cost in an international transaction due to a change in foreign exchange rates is called

• A) foreign exchange risk.
• B) political risk.
• C) translation exposure.
• D) hedging risk.

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Definitions:

Quantity Supplied

The amount of a commodity that producers are willing and able to offer for sale at a specific price over a defined period of time.

Binding Price Ceiling

A legal maximum price for a good or service that is set below the equilibrium price, resulting in shortages.

Equilibrium Price

The market price at which the quantity of a good demanded equals the quantity supplied, leading to market stability.

Surplus

An excess of supply over demand in a market, typically resulting in lower prices.