If Foreign Currency Exchange Rates Are Highly Positively Correlated, How

question 91

Multiple Choice

If foreign currency exchange rates are highly positively correlated, how can a FI reduce its exchange rate risk exposure?

• A)By taking net long positions in all currencies.
• B)By taking net short positions in all currencies.
• C)By taking opposing net short and net long positions in different currencies.
• D)By maximizing net FX exposure in each currency, independently.
• E)By minimizing net FX exposure in each currency, independently.

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Definitions:

TANF

stands for Temporary Assistance for Needy Families, a program that provides financial help to low-income families in the United States.

Welfare Program

Governmental programs designed to support individuals or families in need, offering financial or other aid.

Income Inequality

The uneven distribution of income within a population, leading to a gap between the rich and the poor.

Argument

A reason or set of reasons given with the aim of persuading others that an action or idea is right or wrong.