Solution:
a.)
Net exposure in SF = (FX Assets - FX liabilities) +(FX bought - FX sold)
= (127,500 - 1,000) +(10,200 - 15,300)
=126,500 +(-5,100)
=126,500 - 5,100 = 121,400
Net exposure in $ = (FX assets - FX liabilities) +(FX bought - FX Sold)
= (125,000 - 50,000) +(10,000 - 15,000)
=75,000+ ( - 5,000)
= 75,000 - 5,000 = 70,000
b.)
Net exposure in £ = (FX assets - FX liabilities) +(FX bought - FX sold)
= (38,168 - 16,794) + (11,450 - 15,267)
=21,374 + (-3,817)
=21,374 - 3,817 = 17,557
Net exposure in $ = (FX assets - FX liabilities) +(FX bought - FX sold)
=(50,000 - 22,001) +(15,000 - 20,000)
=27,999+(-5000)
=27,999 - 5,000 =22,999
c.)
Net exposure in yen = (FX assets -FX liabilities) +(FX bought - FX sold)
= (7,869,885 - 3,147,954)+(259,181-233,998)
= 4,721,931 +25,183 =747,114
Net exposure in $ = (FX assets - FX liabilities) +(FX bought - FX sold)
=(75,000 - 30,000) +(12,000 -88,000)
=45,000+(-76,000)
=45,000 - 76,000 = - 31,000
d.)
If assets are greater than liabilities, then an appreciation of the foreign exchange rates will generate a gain
= $70,000 × 0.01(1%) =$7,00
e.)
Gain =$22,999 × 0.01(1%) = $229.99 or $230
f.)
Loss = -31,000 × 0.02(2%) = - $620
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