The possibility of experiencing a drop in revenue or an increase in cost in an international transaction due to a change in foreign exchange rates is called

A) foreign exchange risk.
B) political risk.
C) translation exposure.
D) hedging risk.

The possibility of experiencing a drop in revenue or an increase in cost in an international transaction due to a change in foreign exchange rates is known as foreign exchange risk. This risk arises due to the variability of the exchange rates between the time a transaction is initiated and settled.