Exercise 13-36 Foreign Currency Exchange Consider the following terms: spot rate, currency appreciation, currency depreciation, translation risk, transaction risk, transnational risk, exchange rate, hedging, trading. For each of the following definitions, fill in the blank with the best-fitting term from the above list.

1. The rate at which one currency can be traded for another currency.

2. The possibility that future cash transactions will be affected by changing exchange rates.

3. A month ago, $1 U.S. was worth 8.5 Mexican pesos. Today, $1 is worth 9.0 Mexican pesos. The U.S. dollar has undergone what?

4. The degree to which a firm’s financial statements are exposed to exchange rate fluctuation.

5. The exchange rate of one currency for another for immediate delivery (today).