Which of the following statements are true?

(A) Transaction exposure is inherent in all foreign currency-denominated contractual transactions.

(B) Translation exposure relates to the change in accounting income and balance sheet statements caused by change in exchange rate.

(C) Economic exposure has an impact on the valuation of a firm.

(D) Operating exposure does not have any impact on the firm's future operating revenues or future operating costs.

Choose the correct option from those below:​

Correct option is D

· Statement (A) is correct:
· Transaction exposure arises when a firm has contractual transactions in foreign currency (e.g., importing goods in USD).
· Statement (B) is correct:
· Translation exposure affects a company’s financial statements due to exchange rate fluctuations.
· Statement (C) is correct:
· Economic exposure affects firm valuation in the long run due to changes in exchange rates.
Additional Knowledge
· Why is (D) incorrect?
Operating exposure affects future revenues and costs, making (D) incorrect.