The Following Are the Net Currency Positions of a U

question 28

Multiple Choice

The following are the net currency positions of a U.S.FI (stated in U.S.dollars) . $\begin{array}{lrrrr}\text { Currency} &\text { Assets } & \text { Liabilities } & \text { FX Bought } & \text { FX Sold } \\\text { British pound} &24,600 & 70,000 & 170,400 & 321,000 \\\text { Yen} &31,000 & 20,400 & 250,000 & 220,000 \\\text { Swiss franc} &10,200 & 9,800 & 8,000 & 10,800\end{array}$ How would you characterize the FI's risk exposure to fluctuations in the British pound to dollar exchange rate?

• A)The FI is net short in the British pound and therefore faces the risk that the British pound will rise in value against the U.S.dollar.
• B)The FI is net short in the British pound and therefore faces the risk that the British pound will fall in value against the U.S.dollar.
• C)The FI is net long in the British pound and therefore faces the risk that the British pound will fall in value against the U.S.dollar.
• D)The FI is net long in the British pound and therefore faces the risk that the British pound will rise in value against the U.S.dollar.

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Definitions:

Twin-Countershaft Transmission

A type of manual transmission design in heavy-duty trucks that features two parallel countershafts to increase torque and load capacity.

Timed

Pertaining to an event or action that is measured, controlled, or scheduled to occur at a specific time or interval.

Range Valve

A valve used in pneumatic or hydraulic systems to control the range of operation of a connected device.

Air Leakage

The unintentional escape of air from pneumatic systems, such as those found in air brake systems in vehicles, leading to reduced efficiency or performance.