# Question Chapter 14 The followingare the foreign currency positions of an FI, expressed in the foreign currency: Currency Assets Liabilities FX Bought FX Sold Swiss franc (SF) SF 134, 394 SF 53,758 SF 10, 752 SF 16,127 British pound (f) f30,488 f13,415 f9,146 f12,195 Japanese Yen (¥) ¥ 7, 075,472 ¥ 2,830,189 ¥ 1,132,075 ¥ 8,301,887 The exchange rate of dollars per SF is .9301, dollars per British pounds is 1.6400, and dollars per yen is .010600. The following are the foreign currency positions converted to dollars. Currency Assets Liabilities FX Bought FX Sold Swiss franc (SF) \$125,000 \$50,000 \$10,000 \$15,000 British pound (f) \$50,000 \$22,001 \$14,999 \$20,000 Japanese yen (¥) \$75,000 \$30,000 \$12,000 \$88,000 a. What is the FI’s net exposure to Swiss francs stated in SF and \$s? Net exposure in Swiss francs stated in \$ = \$70,000 b. What is the FI’s net exposure in British pounds stated in f and \$s? Net exposure in British poundsstated in \$= \$23,000. c. What is the FI’s net exposure in Japanese yen stated in ¥ and \$s? Net exposure in Japanese yenstated in \$= -\$31,000 d. What is the expected loss or gain if the SF exchange rate appreciates by 1 percent? State you answers in SFs and \$s. If assets are greater than liabilities, then an appreciation of the foreign exchange rates will generate a gain = \$70,000 x 0.01 = \$7,000. e. What is the expected loss or gain if the f exchange rate appreciates 1 percent? State your answers in fs and \$s. Gain = \$23,000 x 0.01 = \$230 f. What is the expected loss or gain if the ¥ exchange rate appreciates by 2 percent? State your answers in ¥s and \$s. Loss = -\$31,000 x 0.02 = -\$6,200

Question Chapter 14

The followingare the foreign currency positions of an FI, expressed in the foreign currency:

Currency Assets Liabilities FX Bought FX Sold

Swiss franc (SF) SF 134, 394 SF 53,758 SF 10, 752 SF 16,127

British pound (f) f30,488 f13,415 f9,146 f12,195

Japanese Yen (¥) ¥ 7, 075,472 ¥ 2,830,189 ¥ 1,132,075 ¥ 8,301,887

The exchange rate of dollars per SF is .9301, dollars per British pounds is 1.6400, and dollars per yen is .010600. The following are the foreign currency positions converted to dollars.

Currency Assets Liabilities FX Bought FX Sold

Swiss franc (SF) \$125,000 \$50,000 \$10,000 \$15,000

British pound (f) \$50,000 \$22,001 \$14,999 \$20,000

Japanese yen (¥) \$75,000 \$30,000 \$12,000 \$88,000

a. What is the FI’s net exposure to Swiss francs stated in SF and \$s?

Net exposure in Swiss francs stated in \$ = \$70,000

b. What is the FI’s net exposure in British pounds stated in f and \$s?

Net exposure in British poundsstated in \$= \$23,000.

c. What is the FI’s net exposure in Japanese yen stated in ¥ and \$s?

Net exposure in Japanese yenstated in \$= -\$31,000

d. What is the expected loss or gain if the SF exchange rate appreciates by 1 percent? State you answers in SFs and \$s.

If assets are greater than liabilities, then an appreciation of the foreign exchange rates will generate a gain = \$70,000 x 0.01 = \$7,000.

e. What is the expected loss or gain if the f exchange rate appreciates 1 percent? State your answers in fs and \$s.

Gain = \$23,000 x 0.01 = \$230

f. What is the expected loss or gain if the ¥ exchange rate appreciates by 2 percent? State your answers in ¥s and \$s.

Loss = -\$31,000 x 0.02 = -\$6,200