Question

When a firm is taking a net asset position in the holding of a foreign exchange,...

When a firm is taking a net asset position in the holding of a foreign exchange, it is:

Answers:

a) engaging in arbitrage.

b) taking a long position in the foreign exchange.

c) taking a short position in the foreign exchange.

d) hedging.

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Answer #1

Option B.

  • When a firm is taking a net asset position in the holding of a foreign exchange, it is taking a long position in the foreign exchange.
  • If a firm is taking a net asset position it means that it is having a long position of buying and holding the assets.
  • Taking a long position in the foreign exchange refers to holding assets for longer period of time in an expectation of rise in its value.
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