What is foreign exchange risk?

Foreign exchange risk is a financial risk that exists when a financial transaction is denominated in a currency other than that of the base currency of the company.

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Foreign exchange risk is an economic risk that exists when a financial transaction is denominated in a currency other than that of the base currency of the company.

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Foreign exchange risk is a risk that arises out of exchange rate fluctuations.

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None of the above

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Solution

The correct option is A
Foreign exchange risk is a financial risk that exists when a financial transaction is denominated in a currency other than that of the base currency of the company.

Foreign exchange risk is a financial risk that exists when a financial transaction is denominated in a currency other than that of the base currency of the company. The risk is that there may be an adverse movement in the exchange rate of the denomination currency in relation to the base currency before the date when the transaction is completed.

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