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    Question

    An Indian exporter sells EUR 1 million receivables due

    in 6 months but leaves it unhedged. EUR/INR moves unfavorably. What exposure is it?
    A Transaction Correct Answer Incorrect Answer
    B Translation Correct Answer Incorrect Answer
    C Economic Correct Answer Incorrect Answer
    D All Correct Answer Incorrect Answer
    E None Correct Answer Incorrect Answer

    Solution

    Exchange rate exposure directly affecting contractual cash flows (receivables) is transaction exposure.

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