Assume an Australian FI Has US$100 000 in Assets and US$200

question 70

Multiple Choice

Assume an Australian FI has US$100 000 in assets and US$200 000 in liabilities.Further, the FI has bought US$40 000 and sold US$20 000.What is the net FX bought position of the Australian FI?

• A)-US$20,000
• B)US$20,000
• C)US$80,000
• D)US$100,000

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Definitions:

Export Demand

The demand for domestic goods and services in foreign markets.

Hedging

A risk management strategy used to offset potential losses in investments by taking an opposite position in a related asset.

Spot Exchange Rates

Spot exchange rates are the current exchange rates at which currencies can be traded immediately.

Foreign Exchange Risk

The risk of loss due to changes in currency exchange rates affecting the value of investments or financial transactions.