Assume an FI holds a foreign exchange position of EUR 200 000 and further assume that the dollar per unit of EUR rate is $1.053/EUR.What is the dollar value of the position (round to two decimals)?

Question

Quizplus · Accepted Answer

To convert the EUR position to USD, we need to divide it by the USD/EUR exchange rate of $1.053, giving us $189,933.52. Option A and B do the opposite calculation and multiply the EUR position by the exchange rate, which is incorrect. Option D calculates the EUR value of the position after conversion, which is not what the question is asking for.

Assume an FI Holds a Foreign Exchange Position of EUR