The difference between transactions and economic exposure and which one can be easily hedged. Economic Exposure: In an era of globalization there is a lot that depends on foreign exchange, a company suffers from unexpected changes in foreign currency exchange rate which impacts the company’s cash flow, foreign investment and earnings.

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Chapter 25, Problem 11CQ

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To explain: The difference between transactions and economic exposure and which one can be easily hedged.

Economic Exposure:

In an era of globalization there is a lot that depends on foreign exchange, a company suffers from unexpected changes in foreign currency exchange rate which impacts the company’s cash flow, foreign investment and earnings.

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