Question

Which of the following is not a type of risk? Translational risk Transaction risk Inversion risk...

Which of the following is not a type of risk?

Translational risk

Transaction risk

Inversion risk

Economic risk

Homework Answers

Answer #1

The correct answer is inversion risk.

Translational risk is the exchange rate risk which is associated with companies that deal in foreigjn currencies and list foreign assets on their balance sheets.

Transaction risk is the effect of foreign exchange fluctuations on a completed transaction prior to settlement. This type of risk tends to increase during a long period of time between entering into a contract and its settlement.

Economic risk is associated with macroeconomic factors such as government regulations, political stability, or exchange rates which affects investments.

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