Question : Which of the following is not a type of exchange rate risk?
Option 1: Credit risk
Option 2: Interest rate risk
Option 3: Inflation risk
Option 4: Counterparty risk
Answer (1)
12th Jan, 2024
Correct Answer: Inflation risk
Solution :
The correct answer is (c) Inflation risk.
Inflation risk refers to the risk of a decline in the purchasing power of money due to general price level increases in an economy, but it is not directly related to exchange rate movements. Credit risk, interest rate risk, and counterparty risk are all types of risks associated with exchange rate fluctuations.
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