14-64 How Would You Characterize the FI's Risk Exposure to Fluctuations

question 79

Multiple Choice

14-64 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:

Equilibrium Constants

Represents the ratio of concentrations of products to reactants at equilibrium, specific to a particular chemical reaction, denoted as K_eq.

Equilibrium

A state in a chemical reaction where the rates of the forward and reverse reactions are equal, leading to no net change in the concentration of reactants and products over time.

Boat Conformation

A specific geometric arrangement of atoms in cyclic molecules resembling a boat, less stable than the chair conformation.

Cyclohexane

A cycloalkane composed of six carbon atoms arranged in a ring, with molecular formula C6H12, used as a solvent and in the manufacture of nylon.