When Purchasing and Selling Foreign Currencies to Allow Customers to Take

question 60

Multiple Choice

When purchasing and selling foreign currencies to allow customers to take positions in foreign real and financial investments,the FI

• A)acts defensively as a hedger.
• B)acts aggressively as a speculator.
• C)assumes the FX risk itself.
• D)acts as an agent.

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Definitions:

Income Statement

A financial statement that shows a company’s revenues, expenses, and profits or losses over a specific period of time.

Income Summary

An account used in the closing process that summarizes revenues and expenses, transferring the net income or loss to retained earnings.

Closing Process

A sequence of steps performed at the end of an accounting period to prepare the accounts for the next period, including closing temporary accounts such as income summary, revenues, and expenses.

Temporary Account

Accounts that are closed at the end of each accounting period, including revenues, expenses, and withdrawals.