The Following Are the Net Currency Positions of a U

question 71

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 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.

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Definitions:

Ethical Lapse

A failure to act in a morally correct way, often resulting in actions that are unethical or improper.

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The intentional communication of false statements that damage someone’s character or reputation.

False Comments

Incorrect or misleading statements made, often with the intention to deceive.