Answer (C) is correct . Exchange-rate risk is the risk that a foreign currency transaction will be negatively exposed to fluctuations in exchange rates. Because O?&?B Company sells goods to German customers and records accounts receivable denominated in Deutsche marks, O&B Company is exposed to exchange-rate risk.
Answer (A) is incorrect because Liquidity risk is the possibility that an asset cannot be sold on short notice for its market value.
Answer (B) is incorrect because Business risk is the risk of fluctuations in earnings before interest and taxes or in operating income when the firm uses no debt.
Answer (D) is incorrect because Price risk is a component of interest-rate risk.
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