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    Question

    When an enterprise has an unhedged receivable or payable

    denominated in a foreign currency and settlement of the obligation has not yet taken place that firm is said to have:
    A Transaction exposure Correct Answer Incorrect Answer
    B Accounting exposure Correct Answer Incorrect Answer
    C Infinite exposure Correct Answer Incorrect Answer
    D Operating exposure Correct Answer Incorrect Answer

    Solution

    Unhedged payables are the instruments which are not safe from exchange rate fluctuations. Transaction exposure is the risk of loss from a change in exchange rates during the course of a business transaction.

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