PZK Co$,$ whose home currency is the dollar, trades regularly with customers in a numbe

different countries. The company expects to receive $1,200,000$ in six month' time frol

foreign customer. Current exchange rates in the home country of PZK Co are as follows:

Spot exchange rate:

Six$-$month forward exchange rate:

$4\mathrm{.}1780-4\mathrm{.}2080$ euros per $

Twelve$-$month forward exchange rate:

$4\mathrm{.}2302-4\mathrm{.}2606$ euros per $

$4\mathrm{.}2825-4\mathrm{.}3132$ euros per $

The interest rate in the home country of PZK Co is $4\%$ per year.

As well as considering the use of derivatives to hedge the risk exposure presented by th

receipt, the treasurer of PZK is looking at 'internal' methods such as invoicing in dollars an

leading and lagging.

$($a$)$ What type of risk exposure is PZK Co exposed to due to the foreign receipt?

A Transaction risk

B Economic risk

C Translation risk

D Political risk