The Following Are the Net Currency Positions of a U

question 101

Multiple Choice

The following are the net currency positions of a U.S.FI (stated in U.S.dollars) . $$\begin{array} { | l | l | r | r | r | } \hline \text { Currency } & \text { Assets } & \text { Liabilities } & \text { FX Bought } & \text { FX Sold } \\\hline \text { British pound } & 24,600 & 70,000 & 170,400 & 321,000 \\\hline \text { Yen } & 31,000 & 20,400 & 250,000 & 220,000 \\\hline \text { Swiss franc } & 10,200 & 9,800 & 8,000 & 10,800 \\\hline\end{array}$$ How would you characterize the FI's risk exposure to fluctuations in the Swiss franc/dollar exchange rate?

• A)The FI is net short in the franc and therefore faces the risk that the franc will rise in value against the U.S.dollar.
• B)The FI is net short in the franc and therefore faces the risk that the franc will fall in value against the U.S.dollar.
• C)The FI is net long in the franc and therefore faces the risk that the franc will fall in value against the U.S.dollar.
• D)The FI is net long in the franc and therefore faces the risk that the franc will rise in value against the U.S.dollar.
• E)The FI has a balanced position in the Swiss franc.

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Definitions:

Identical Concepts

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Ethics

The moral principles that govern a person's behavior or the conducting of an activity, focusing on what is good or bad and right or wrong.

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Principles concerning the distinction between right and wrong or good and bad behavior.

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