Question

If a firm has more foreign currency assets than liabilities, and no other foreign currency transactions, it has Group of answer choices positive net exposure. negative net exposure. a fully balanced position. zero net exposure.

Answer 1

Answer: Positive net exposure

Explanation:

Net exposure is the difference in quantity between an investment's fund lengthy and brief exposure. It measures the level to which the trading book of a fund is exposed to variations in the industry.

A firm that possess more foreign assets than its liabilities has a positive net exposure. Positive net exposure implies that there is a currency's net long. This means that in a given currency, a firm possesses more assets than liabilities. The main disadvantage with positive net exposure is that there may be a fall in the value of the foreign currency at the expense of the domestic currency in the long run.

Answer 2

Answer:

The correct answer is letter "A": positive net exposure.

Explanation:

The term net exposure is often used in trading securities to compare the long positions against the short positions of an institution, usually a hedge fund. The net exposure is shown as a percentage.  

Positive net exposure implies the firm having more long positions than short positions in a given currency or that the firm is holding more assets than liabilities in that currency. Though, the firm is exposed to the risk that the foreign currency falls in value compared to the domestic currency.