If FIs hold foreign financial assets, they are exposed to what risk?
A)default risk
B)liquidity risk
C)exchange rate risk
D)interest rate risk

Question

Quizplus · Accepted Answer

Holding foreign financial assets exposes FIs to exchange rate risk. Fluctuations in exchange rates can impact the value of these assets and ultimately affect the profits of the FI. Default risk, liquidity risk, and interest rate risk are also important risks to consider, but they are not necessarily specific to holding foreign financial assets.

If FIs Hold Foreign Financial Assets, They Are Exposed to What