20-146 What is the credit equivalent amount of the off-balance-sheet foreign exchange contracts if it is out-of-the-money by $4 million?

Question

Quizplus · Accepted Answer

The credit equivalent amount is calculated by adding the current exposure (if any) to the potential future exposure. Since the contract is out-of-the-money by $4 million, the current exposure is $0. Assuming a potential future exposure of $5 million, the credit equivalent amount is $5 million.

20-146 What Is the Credit Equivalent Amount of the Off-Balance-Sheet