Which of the Following Statements Is True

question 58

Multiple Choice

Which of the following statements is true?

• A)By directly matching its foreign asset and liability book, an FI can lock in a positive return on profit spread if exchange rates rise over the investment period.
• B)By directly matching its foreign asset and liability book, an FI can lock in a positive return on profit spread if exchange rates fall over the investment period.
• C)By directly matching its foreign asset and liability book, an FI can lock in a positive return on profit spread whichever direction exchange rates change over the investment period.
• D)By directly matching its foreign asset and liability book, an FI holds a neutral position, that is, earnings equalling zero, whichever direction exchange rates change over the investment period.

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Definitions:

Beginning

The starting point or initial state of an event, process, or accounting period.

Released

Typically refers to products, information, or software being made available to the public or to a specific group.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Annual Cost Savings

The reduction in total expenses achieved during a fiscal year, often as a result of process improvements or budget adjustments.