Q. The forward market is especially well suited to offer hedging :

A
Translation risk exposure
B
Transactions risk exposure
C
Political risk exposure
D
Taxation
Solution:

Transaction exposure is the level of risk faced by companies involved in international trade, specifically, the risk that currency exchange rates will change after a company has already entered into financial obligations.

A high level of exposure to fluctuating exchange rates can lead to major losses for firms.

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