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      Question

      The risk of loss due to adverse changes in exchange

      rates is known as:
      A Credit Risk Correct Answer Incorrect Answer
      B Transaction Risk Correct Answer Incorrect Answer
      C Operational Risk Correct Answer Incorrect Answer
      D Liquidity Risk Correct Answer Incorrect Answer

      Solution

      Transaction risk is the exchange rate risk associated with the time delay between entering into a contract and settling it. It affects cash flows.

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