Question

P.J. Chase Stanley Bank holds $84 million in foreign exchange assets and $80 million in foreign exchange liabilities. P.J. Chase Stanley also conducted foreign currency trading activity in which it bought $174 million in foreign exchange contracts and sold $140 million in foreign exchange contracts. a. What is P.J. Chase Stanley’s net foreign assets? (Enter your answer in millions.) Net foreign assets $ million b. What is P.J. Chase Stanley’s net foreign exchange bought? (Enter your answer in millions.) Net foreign exchange bought $ million c. What is P.J. Chase Stanley’s net foreign exposure? (Enter your answer in millions.) Net foreign exposure

Answer 1

Solution:
a.	Net foreign assets                $	4	million
Working Notes:
	Net Foreign Assets = Total foreign assets – total foreign liabilities
	=$84 million - $80 million
	=$ 4 million
b.	Net foreign exchange bought   $	34	million
Working Notes:
	Net foreign exchange bought = Foreign exchange contract bought - Foreign exchange contract sold
	=$174 million - $140 million
	=$34 million
c.	Net foreign exposure   $	38	million
Working Notes:
	Net exposure =Net Foreign Assets + Net foreign exchange bought
	=$4 million + $34 million
	=$38 million
Please feel free to ask if anything about above solution in comment section of the question.