A depreciation of the yen could expose an FI that is holding supplies of yen to which of the following types of risk?
A)default risk
B)interest rate risk
C)liquidity risk
D)exchange rate risk

Question

Quizplus · Accepted Answer

A depreciation of the yen would lead to a decrease in the value of the yen relative to other currencies. If an FI is holding supplies of yen, a depreciation of the yen would lead to a decrease in the value of those supplies in terms of other currencies. This exposes the FI to exchange rate risk.

A Depreciation of the Yen Could Expose an FI That