Question

Transaction exposure reflects: a.the exposure of a firm's financial statements to exchange rate fluctuations. b.the exposure of a firm's cash flows to exchange rate fluctuations. c.the exposure of a firm's local currency value to transactions between foreign exchange traders. d.the exposure of a firm's international transactions to exchange rate fluctuations.

Answer 1

Most times, the transaction exposure reflects the exposure of a firm's international contractual transactions to exchange rate fluctuations

What is a transaction exposure?

This refers to the level of uncertainty that a firm involved in an international trade faces because of the risk that fluctuation of currency exchange rates presents.

Hence, its reflects the exposure of a firm's international contractual transactions to exchange rate fluctuations

Therefore, the Option A is correct.

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