1. The two requirements for transaction exposure are: 

A. The company must use FASB #8 for its translation of foreign assets and liabilities

B. The involvement of a foreign currency

C. The functional currency must be that of the local currency

D. There must be a financial obligation

E. The company must be a multinational corporation

2. A ________ position allows a company to enjoy the benefits of a favorable change in exchange rates for its foreign currency receivables contract, but if the exchange rates were to move in the unfavorable direction, it will suffer losses.

A. option hedge

B. forward hedge

C. unhedged

D. money market hedge