A bank's net balance sheet exposure to changes in the value of Euros is measured as:
A) the amount of assets denominated in U.S. dollars minus the amount of liabilities denominated in Euros.
B) the amount of assets denominated in Euros minus the amount of liabilities denominated in U.S. dollars.
C) the amount of liabilities denominated in Euros minus the amount of liabilities denominated in U.S. dollars.
D) the amount of assets denominated in Euros minus the amount of assets denominated in U.S. dollars.
E) the amount of assets denominated in Euros minus the amount of liabilities denominated in Euros.

Question

Quizplus · Accepted Answer

The net balance sheet exposure to changes in the value of Euros for a bank is calculated by subtracting the amount of liabilities denominated in Euros from the amount of assets denominated in Euros. This measures the net position in Euros and how changes in the Euro's value could affect the bank's financial position.

A Bank's Net Balance Sheet Exposure to Changes in the Value