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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Economic risk
Dear Sir,
I have just attempted my f9 paper today and consisted of an mcq which asked us to identify which among them qualifies as economic risk.
The option I chose was ” A Brazilian company taking a long term loan of 20m€ at 7% interest.”
I know that without seeing all the options you can’t tell me if I am wrong or right, but it would be of great help if you could just let me know if the long term loan qualifies as economic risk. I thought that as changes in exchange rate affect future cash flows (interest payment), it could be termed as economic risk.
Thank you in advance.
Regards,
Rajvir Singh Oberai.
Changes due to exchange rates would more likely be classed as transaction risk.
However I would need to see the whole question to be sure what answer was expected in this case.