The Following Are the Net Currency Positions of a Canadian

question 30

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 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:

Sampling Bias

A bias in which certain members of a population are disproportionally represented in a sample, leading to inaccurate results.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two quantitative variables.

Statistical Measure

A quantifiable value used to summarize or describe a set of data.

Meta-Analysis

A statistical technique that combines the results of multiple studies to derive a more comprehensive understanding of a particular research question.