The impact of random change in the value of one currency with respect to other currencies is called the a. transaction risk. b. exchange rate risk. c. consolidated risk. d. economic risk. Using currency derivatives to reduce potential transaction, translation, and economic risks of currency movements that could lead to losses for a firm or investor is called a. speculating. b. a short position. c. an organized exchange position. d. hedging.

The impact of random change in the value of one currency with respect to other currencies is called the a. transaction risk. b. exchange rate risk. c. consolidated risk. d. economic risk. Using currency derivatives to reduce potential transaction, translation, and economic risks of currency movements that could lead to losses for a firm or investor is called a. speculating. b. a short position. c. an organized exchange position. d. hedging.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter11: Foreign Exchange, Trade, And Bubbles

Section: Chapter Questions

Problem 3MC

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Question

The impact of random change in the value of one currency with respect to other currencies is called the

a. transaction risk.

b. exchange rate risk.

c. consolidated risk.

d. economic risk.

Using currency derivatives to reduce potential transaction, translation, and economic risks of currency movements that could lead to losses for a firm or investor is called

a. speculating.

b. a short position.

c. an organized exchange position.

d. hedging.

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