Question

Citibank holds $23 million in foreign exchange assets and $18 million in foreign exchange liabilities. Citibank also conducted foreign currency trading activity in which it bought $5 million in foreign exchange contracts and sold $12 million in foreign exchange contracts

a.What is Citibank's net foreign assets ? (Enter your answer in millions)

b.What is Citibank's net foreign exchange bought (Enter your answer in millions. Negative amount should be indicated by a minus sign.)

c.What is Citibank's net foreign exposure ? (Enter your answer in millions. Negative amount should be indicated by a minus sign.)

a.net foreign assets _____ million

b.net foreign exchange ______ million

c.net foreign exposure _______ million

Answer 1

a)
Net foreign assets = Foreign exchange assets - Foreign exchange liabilities
= $23 million - $18 million
= $5 million

Net foreign assets = $5 million

b)
Net foreign exchange bought = Foreign exchange bought - Foreign exchange sold
= $5 million - $12 million
= -$7 million

Net foreign exchange bought = -$7 million

c)
Net foreign exposure = Net foreign assets + Net foreign exchange bought
= $5 million + (-$7 million)
= -$2 million

Net foreign exposure = -$2 million