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Economic exposure is most closely associated with:
AMismatches in translation of historical balance-sheet items
BShort-term FX gains on hedged forward positions
CLong-term changes in firm value due to unexpected FX moves
DAccounting reclassification of monetary items
Answer & Solution
Correct answer: C. Long-term changes in firm value due to unexpected FX moves
1. Identify what the question asks: this concept maps to economicexposure (§10.3).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (C).
_Source: ICAI BoS CA Final Paper 2, Ch 10 "Foreign Exchange Exposure and Risk Management"_
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