Ace the AFP Exam 2026 – Boost Your Financial Wizardry!

In the context of international transactions, the lifecycle of a sale typically involves various stages, each exposing the company to different types of risks. In this scenario, the period from the delivery of goods (stage III) to payment collection (stage IV) is particularly critical. During this phase, the U.S. company has already fulfilled its part of the contract by delivering the products, but there remains a risk related to the collection of payment.

Explicit risk refers to situations where the potential for loss is defined and measurable. In this transaction lifecycle, the explicit risk arises from the possibility of the buyer in England defaulting on payment or delaying payment after the goods have been delivered. This can be influenced by various factors, including economic conditions in England, the financial stability of the buyer, or currency fluctuations that may affect the buyer's ability to pay.

Thus, the risk from the delivery of goods until the collection of payment is the point where explicit risks are heightened, making this the correct choice in identifying the exposure to explicit risk in the transaction lifecycle for a U.S. company operating in England.