alleryStart learning →A firm holds assets in a foreign currency whose exchange rate may change. Which risk applies?
AInterest rate risk
BCurrency exchange risk
CStatistical model risk
DConcentration risk
Answer & Solution
Correct answer: B. Currency exchange risk
Currency risk is the risk that foreign exchange rates change, altering the value of an asset held in that currency.
Keep practising Risk Management
Browse all Risk Management questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
What does an option give its buyer?Which contract is standardized in terms of asset, quantity, price and date?An investor holds a stock and buys an option to sell it at a set price. What is the cost oWhat is hedging?What went wrong with diversification in the late-2000s recession?Diversification benefits increase when the correlation between assets is what?Who initiated modern portfolio theory in 1952 with the thesis "Portfolio Selection"?In modern portfolio theory, how is the risk of a portfolio defined?