The Following Are the Net Currency Positions of a Canadian

question 46

Multiple Choice

The following are the net currency positions of a Canadian FI (stated in Canadian dollars) . How would you characterize the FI's risk exposure to fluctuations in the yen/dollar exchange rate?

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