Three Types of Exposure ● Economic Exposure Exchange rate risk as applied to the firms competitive position o Transaction Exposure Exchange rate risk as applied to the firms home currency cash flows. The subject of Chapter 13 Translation Exposure Exchange rate risk as applied to the firms consolidated financial statementS. The subject of Chapter 14 McGraw-Hilylrwoin 12-2 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rightsMcGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 12-2 ⚫ Economic Exposure ◼ Exchange rate risk as applied to the firm’s competitive position. ⚫ Transaction Exposure ◼ Exchange rate risk as applied to the firm’s home currency cash flows. The subject of Chapter 13. ⚫ Translation Exposure ◼ Exchange rate risk as applied to the firm’s consolidated financial statements. The subject of Chapter 14 Three Types of Exposure