Тестовый вопрос
Universal Exports Co limits its operations to exporting overseas. Which of the following statements about Universal's exposure to exchange rate risk is correct?
Transaction risk arises from the effect of exchange rate movements on the value of the company's cash flows from exports. Economic risk (also called operating risk) arises from the long-term effect of exchange rate changes on the company's market value. These are the relevant risks for a company engaged solely in exporting. Translation risk (from option A) arises when a company has foreign subsidiaries whose financial statements need to be converted into the home currency for consolidation. Since Universal Exports Co. only engages in exporting and has no mention of foreign subsidiaries, translation risk is not relevant here.