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A London based firm has a subsidiary located in New York.The subsidiary has $1,000 in assets, $750 in liabilities and $250 in equity.The current spot rate is $1.60/£.
-What is the U.S.firm's net exposure?

Question

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A London based firm has a subsidiary located in New York.The subsidiary has $1,000 in assets, $750 in liabilities and $250 in equity.The current spot rate is $1.60/£.
-What is the U.S.firm's net exposure?

Quizplus · Accepted Answer

The U.S. firm's net exposure is the difference between its assets and liabilities in U.S. dollars. The subsidiary's assets are $1,000, and its liabilities are $750. Therefore, the subsidiary's net exposure is $250.

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