Question
Americorp. has an exposure (having unhedged positions) in both Swiss francs (SF) with expected net inflows of SF 200 mil. and in Danish kroner (DK),
Americorp. has an exposure (having unhedged positions) in both Swiss francs (SF) with expected net inflows of SF 200 mil. and in Danish kroner (DK), with expected net outflows of DK500 mil. Current exchange rates are $0.40/SF and $0.10/DK. If the dollar weakens, then Americorp. will:
Select one: a. be adversely affected, because the dollar value of its SF position exceeds the dollar value of its DK position.
b. remains unaffected, because of the no changes in net inflows and outflows
c. benefit, because the dollar value of its SF position exceeds the dollar value of its DK position
d. benefit, because the dollar value of its DK position exceeds the dollar value of its SF position.
e. be adversely affected, because the dollar value of its DK position exceeds the dollar value of its SF position.
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