A Positive Net Exposure Position in FX Implies That the FI

question 17

Multiple Choice

A positive net exposure position in FX implies that the FI is

• A)net long in a currency and exposed to depreciation of the foreign currency.
• B)net short in a currency and exposed to depreciation of the foreign currency.
• C)net long in a currency and exposed to appreciation of the foreign currency.
• D)net short in a currency and exposed to appreciation of the foreign currency.
• E)neither long nor short in a currency.

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Definitions:

Contribution Per Unit

The amount of revenue from each unit sold that contributes to covering fixed costs and generating profit.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, or insurance premiums.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor.

Target Profit

The desired level of profit a company aims to achieve within a specific time frame.