How Would You Characterize the FI's Risk Exposure to Fluctuations

question 90

Multiple Choice

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.
• E)The FI has a balanced position in the British pound.

---

Definitions:

Intellectualization

A coping strategy that employs logic to avoid facing an internal conflict and the emotional turmoil it brings.

Detaching

The process of emotionally or physically distancing oneself from a person, situation, or thought.

Projection

A defense mechanism in psychology where individuals attribute their own unacceptable thoughts, feelings, or motives to another person.

Reaction Formation

This defense mechanism involves the disguising of one's own threatening impulses by attributing them to others in an exaggerated or opposite form, as a means of coping with anxiety.