A Bank Faces Foreign Exchange Risk When

question 112

Multiple Choice

A bank faces foreign exchange risk when:

• A) it has assets denominated in one currency and liabilities in another.
• B) it lends to foreign borrowers because they are less likely to repay a U.S. bank.
• C) foreign governments restrict dollar-denominated payments.
• D) it has branches in other countries.

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Definitions:

Luminous

Emitting or reflecting light, brightly shining, often used to describe objects that can glow in the dark.

Law of Continuity

A principle in Gestalt psychology stating that elements that appear to follow in the same pathway tend to be grouped together perceptually.

Unity

The state of being united or joined as a whole, often used to describe a sense of harmony and togetherness among group members.

Vestibular System

A complex set of sensory structures in the inner ear that helps maintain balance and spatial orientation.