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:

Groupthink

Groupthink refers to a psychological phenomenon where the desire for harmony and conformity within a group results in an irrational or dysfunctional decision-making outcome.

Nominal Group

A technique used in group decision-making that involves individuals generating ideas independently before sharing and discussing them collectively.

Illusion Of Agreement

The false perception that consensus has been achieved in a group when, in reality, members may not fully understand or support the decision.

Mediator

An impartial individual who facilitates dialogue between conflicting parties to help them reach a mutual agreement.