Which of the following statements is FALSE?A.An FI is “net long” in foreign assets if it holds more foreign assets than liabilities.B.Matching the size of the foreign currency book will not eliminate the risk of the international transactions if the maturities of the assets and liabilities are mismatched.C.Foreign exchange risk is the risk that exchange rate changes can affect the value of an FI’s assets and liabilities denominated in foreign currencies.D.If the euro is expected to depreciate in the near future, an Australian-based FI in Paris would prefer net long in its foreign (euro) asset positions.E.Given the current spot rate is S$1.50/A$1, if the exchange rate at the end of the year is S$1.00/A$1, the Australian dollar have depreciated against the Singapore dollar.

Which of the following statements is TRUE?A.An FI is net long in foreign assets if it holds more foreign liabilities than foreign assets. B.Off-balance-sheet activities often affect the shape of a FIs current balance sheet through the creation of contingent claims. C.For an FI to exactly hedge the foreign investment risk, the foreign currency assets must equal the foreign currency liabilities. D.Technology risk is the uncertainty that economies of scale or scope will be realized from the investment in new technologies. E.To be immunized against foreign currency and foreign interest rate risk, an FI should match either the size or the maturities of its foreign assets and foreign liabilities.

Which of the following statements is TRUE?A.A FI is "short-funded" if the maturity of its labilities are shorter than the maturities of its assets. B.Refinancing risk is the risk that the cost of re-borrowing funds will be lower than the return being earned on asset investments. C.If the Swiss franc is expected to appreciate in the near future, a U.S.-based FI in Bern City would prefer to net short in its foreign asset positions.D.FIs face a high level of interest rate risk when performing their brokerage function.E.If a FI is "long-funded", it would incur a loss if interest rates are going to increase significantly in the near future.

Assume that an U.S. bank has assets located in London that are worth £200 million on which it earns an average of 10 percent per year. The bank has £250 million in liabilities on which it pays an average of 6 percent per year. The current spot exchange rate is £1.25/$ and  the exchange rate at the end of the year is £2.00/$. Which of the following is FALSE?A.The bank is currently holding a net short position the foreign assets.B.At the end of the year, the bank would have an increase in its net interest income from the foreign assets and liabilities.C.The bank is exposed to interest rate risk if the duration of the foreign assets differs from the duration of the foreign liabilities.D.At the end of the year, the bank would have a reduction in its net interest income from the foreign assets and liabilities.E.The pound has depreciates against the dollar.

Which of the following statements are false:I. In free float currency regimes central banks may intervene into FX markets only to add up its official foreign currency reserves and to trade foreign currency for servicing government debt;II. If the speculator believes that the currency is underpriced, short position will be taken in FX market;III. Arbitrageurs exploit market inefficiencies by implementing risky-free strategies;IV. Cross-border trade transactions take place only in USD and REM.Question 6Select one:a.All of the statements are falseb.All of the statement are truec.Only I, II and IV are falsed.Only I and IV are falsee.Only I and III are falsef.Only II, III and IV are falseg.Only I, II and III are falseh.Only III and IV are false

Which of the following statements are false:I. Central banks interfere into FX markets only to support their domestic currency;II. If the speculator believes that the currency is overpriced, long position will be taken in FX market;III. FX dealers usually seek for better prices from brokers and take the average between the bid and ask for getting the quote for the client;IV. Cross-border trade transactions usually take place in USD.Question 6Select one:a.All of the statements are falseb.All of the statement are truec.Only I, II and IV are falsed.Only I and IV are falsee.Only I and III are falsef.Only II, III and IV are falseg.Only I, II and III are falseh.Only III and IV are false