Economics · International Finance
Given below are two statements: Statement I: Translation exposure refers to the exchange gain or loss occurring from the difference in the exchange rate at the beginning and the end of the accounting period. Statement II: Transaction exposure refers to the change in the value of the firm caused by the unexpected changes in the exchange rate. In the light of the above statements, choose the most appropriate answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement I is incorrect but Statement II is correct.
- 2Statement I is correct but Statement II is incorrect.✓
- 3Both Statement I and Statement II are incorrect.
- 4Both Statement I and Statement II are correct.
Correct answer
Statement I is correct but Statement II is incorrect.
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