Question

An example of transaction exposure is when:__________.

a) companies have obligations for the purchase of goods at previously agreed prices.
b) companies borrow funds in domestic currency.
c) there is an impact of currency exchange rate changes on the reported financial statements of a company.
d) there is a long-term effect of changes in exchange rates.
e) changing exchange rates persists on future prices, sales, and costs

Answer 1

Answer: companies have obligations for the purchase of goods at previously agreed prices.

Step-by-step explanation:

Transaction exposure is the uncertainty

that is typically faced by businesses that are involved in international trade. It is the risk that there will be a fluctuation in the currency exchange rates after a firm might have already taken part in a financial obligation.

Therefore, an example of transaction exposure from the question will be when companies have obligations for the purchase of goods at previously agreed prices.