Question

The stages in the life of a transaction exposure can be broken into three distinct time periods. The first time period is the time between quoting a price and reaching an actual sale agreement or contract. The next time period is the time lag between taking an order and actually filling or delivering it.​ Finally, the time it takes to get paid after delivering the product. In​ order, these stages of transaction exposure may be identified​ as: A) backlog, quotation, and billing exposure.B) billing, backlog, and quotation exposure.

C) quotation, backlog, and billing exposure.
D) quotation, billing, and backlog exposure.

Answer 1

C) quotation, backlog, and billing exposure.

Step-by-step explanation:

In international trade, transaction exposure (or translation exposure or risk) refers to the uncertainty level that companies suffer from possible fluctuations in the currency exchange markets. This happens because when one company assumes a financial obligation with a foreign entity or invests in foreign assets, its profitability largely depends on the currency exchange fluctuations. For example, a company buys Japanese components and must pay in yens, if the yen appreciates against the US dollar, a large portion of the company's profit will vanish or might even incur in losses.

Total transaction exposure is measured by adding quotation exposure, backlog exposure and billing exposure.

• Quotation exposure: happens when the domestic company quotes a price in a foreign currency and the foreign company does not place an order immediately.
• Backlog exposure: happens when the domestic company places or receives an order from a foreign company but the shipment and billing is delayed (it takes time to ship goods).
• Billing exposure: happens between the time that the goods are billed and the actual payment is made.

Answer 2

Option C

Quotation, backlog, and billing exposure

Step-by-step explanation:

Transaction exposure refers to the risks or uncertainties that businesses which are involved in international trade face, as a result of the rise and fall in the value of currencies due to inflation.

The stages in traction exposure are summarized below:

• Transaction exposure starts when a seller quotes a price in a foreign currency term to a prospect/ potential buyer.
• When the prospect agrees to the quote and places an order, this becomes a Backlog. This is because the product has not yet been shipped or billed.

• Once the goods are shipped, it becomes billing exposure

Following this sequence, Option C is the correct answer.