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

question 3

Multiple Choice

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:

Capacity Expansion

The process of increasing the production capabilities of a facility or system to meet expected demand increases.

Total Cost Comparisons

The process of comparing the overall costs of different alternatives or options in order to make a decision that minimizes costs while achieving desired outcomes.

Preventive Maintenance

A plan that involves routine inspections, servicing, and keeping facilities in good repair to prevent failure.

Efficiency Level

A measurement of how well an entity uses its resources to achieve goals, often defined by the ratio of useful output to total input.