Certified in Logistics, Transportation and Distribution (CLTD) Practice Test 2025 – Your All-in-One Resource to Complete Exam Success!

Transaction Exposure in international trade specifically pertains to the risk associated with fluctuations in exchange rates that can affect the value of cash flows from international transactions. When a company engages in transactions that involve different currencies, the amount it receives or pays can vary depending on the exchange rate at the time of settlement. This volatility can lead to gains or losses that directly impact the company's financial performance.

For instance, if a company agrees to pay for goods in a foreign currency, a decline in the value of that currency relative to the company's home currency can lead to a higher effective cost when the transaction is settled. Conversely, if the currency appreciates, the cost could become lower. This dynamic underscores the importance of managing transaction exposure to mitigate risks associated with exchange rate movements.

The other choices address different aspects of international trade. Inventory devaluation relates to the risk of loss stemming from changes in the value of goods rather than currency fluctuations. Market competition pertains to how businesses face rivals in their sector but does not involve currency risk. Similarly, customs duties refer to the costs associated with importing or exporting goods and are not directly related to the financial risks posed by exchange rate changes.