Which four statements regarding economic risk are true? A Economic exchange risk combines the conversion effect (transaction
Question:
A Economic exchange risk combines the conversion effect (transaction risk) with the time effect.
B Establishing international operations in multiple currency areas can diversify economic exchange risks and can result in real options.
C Economic exchange risk is only relevant for companies who operate internationally.
D Economic exchange risk affects the long-term competitiveness of companies.
E Economic exchange risk is the oldest of foreign exchange risk concepts.
F Certain commodities like crude oil can result in indirect economic exchange risk because they are traded in USD.
G The degree of economic risk depends on factors like market structure, substitutability of product and the structure of the company.
H Economic exchange risk can be hedged with financial derivatives and invoicing in the home currency.