Question

Managing economic exposure is generally perceived to be ____ managing transaction exposure. a. more difficult than b. less difficult than c. just as difficult as d. none of these

Answer 1

Answer:

The correct answer is letter "A": more difficult than.

Explanation:

Transaction exposure refers to the risk given by transactions already contracted. The most common risk associated with transactions is currency exchange fluctuations. Economic exposure refers to transaction exposure added to the operational risks involved in the transactions, Economic exposure is not easy to identify.

Thus, as the risk scope of economic exposure is wider, it is seen as more complex than transaction exposure.

Answer 2

Answer:

the correct answer is a. more difficult than

Explanation:

Unlike Transaction exposure, economic exposure is difficult to predict and difficult to mitigate in an event of occurence, thus making it harder to manage than transaction exposure.

This is mainly because economic exposure can happen due to various macro economic factors and international political incidents.