This Question should be answer be TRUE or FALSE. Please notice that.

$$ There are two types of foreign exchange transaction; swap and forward.

$$ A depreciation of the domestic currency means a decrease in the direct quote.

$$ A decrease in the indirect quote will be profitable for a domestic FI which is net short foreign currencies.

$$ Off$-$balance$-$sheet hedge will also require duration matching to control exposure to foreign interet rate.

$$ The Big Mac index is based on the theory of purchasing$-$power parity $($PPP$).$

$$ In todays' banking business, trading activities become more important than the traditional banking activities like deposit taking and lending.

$$ Market risk is related to the uncertainty of a FI's earnings on its investment portfolio caused by changes in market conditions like interest rates and exchange rates.

$$ Variance is used by both analysts and traders to determine volatility and market security.

$$ Historic or Back Simulation model underestimates the risk of extreme losses.

$$ CD Monte Carlo approach is about the generation of additional observations of rates and or returns which reflect the probability with which they occured in recent historic time periods.

$$ Life insurance companies are more exposed to liquidity risk than the depository institutions.

$$ LIBOR is a benchmark rate that reflects the rate at which Central Banks lend to the banks in the interbank market.

$$ The advantage of purchased liquidity management stems from the fact that you manage your balance she without disturbing your asset side.

$$ A high ratio of loan commitments to assets indicates the need for a high degree of liquidity to fund unexpected takedowns of these loans.

$$ A DI manager who excessively undershoots the reserve target faces enhanced risks of liquidity crise regulatory intervention.