The correct answer is: B. exchange rate risk.
Exchange rate risk is the risk that the value of an investment will change due to changes in the exchange rate between the currencies of the investment and the investor’s home country. This risk can be significant for investors who hold assets in foreign currencies, as changes in exchange rates can have a large impact on the value of those assets.
Preferred risk is a type of risk that is considered to be desirable, as it has the potential to generate a higher return than other types of risk. This type of risk is often associated with investments in new or emerging markets, as these markets are often more volatile than developed markets.
Country risk is the risk that an investment will be affected by political or economic instability in the country in which it is located. This type of risk can be significant for investors who hold assets in countries with unstable governments or economies, as these countries are more likely to experience sudden changes in economic conditions that can have a negative impact on the value of investments.
Foreign risk is a general term that refers to any type of risk that is associated with investing in foreign countries. This type of risk can include exchange rate risk, country risk, and political risk.
In conclusion, the correct answer to the question “Risk in which value of investment depends on what happens to foreign exchange rates is classified as” is B. exchange rate risk.