The importance of an explicit treatment of continuum channels in the (d,He-
2) charge-exchange reaction is investigated. The continuum channel effects
are clarified by a comparison of the full three-body results with calculati
ons which use the distorted waves approximation to the three-body model. Co
ntinuum channel effects are shown to reduce the calculated C-12(d,He-2)B-12
(g.s.) differential cross section at 270 MeV incident deuteron energy. This
reduction is consistent with that from an earlier ad hoc modification of t
he absorptive content of an assumed He-2 optical potential within distorted
waves Born approximation calculations. [S0556-2813(99)05408-4].