The correct answer is C. Both A and B.
Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace. This situation, in turn, makes it necessary for many firms to carefully manage their exchange risk exposure. Exchange risk exposure is the risk that a firm’s financial performance will be adversely affected by changes in exchange rates. Firms can manage their exchange risk exposure by using a variety of techniques, such as hedging, forward contracts, and currency swaps.
In addition to managing their exchange risk exposure, firms also need to carefully measure their exchange risk exposure. This is because the amount of exchange risk exposure that a firm faces will depend on a number of factors, such as the firm’s business activities, its financial structure, and its hedging policies. By carefully measuring their exchange risk exposure, firms can better understand the potential risks that they face and take steps to mitigate those risks.
Option A is correct because firms need to carefully manage their exchange risk exposure in order to protect their financial performance from adverse changes in exchange rates. Option B is also correct because firms need to carefully measure their exchange risk exposure in order to understand the potential risks that they face and take steps to mitigate those risks. Therefore, the correct answer is C. Both A and B.