The following are the net currency positions of a U.S.FI (stated in U.S.dollars).
Note: Net currency positions are foreign exchange bought minus foreign exchange sold restated in U.S.dollar terms.
$\begin{array}{l}
\begin{array}{lll}
\text {Currency}\
\text {Canaclian Dollay}\
\text {Euro}\
\text {Japane se Yen}\
\text {SWiss: Fiadc}\
\text {British Pound.}\
\end{array}
\begin{array}{lll}
\text {Net Position}\
\text {+U.S. \$ 1,200}\
\text {-U.S. \$ 245,900}\
\text {+U.S. \$ 505,000 }\
\text {-U.S. \$ 36,700}\
\text {+U.S. \$447,900}\
\end{array}
\end{array}$
What is the portfolio weight of the Euro in this FI's portfolio of foreign currency?
A)+0.18 percent.
B)-36.62 percent.
C)+75.20 percent.
D)-5.47 percent.

Question

The following are the net currency positions of a U.S.FI (stated in U.S.dollars). 
Note: Net currency positions are foreign exchange bought minus foreign exchange sold restated in U.S.dollar terms.
$\begin{array}{l}
\begin{array}{lll}
\text {Currency}\
\text {Canaclian Dollay}\
\text {Euro}\
\text {Japane se Yen}\
\text {SWiss: Fiadc}\
\text {British Pound.}\
\end{array}
\begin{array}{lll}
\text {Net Position}\
\text {+U.S.  \$ 1,200}\
\text {-U.S.  \$ 245,900}\
\text {+U.S. \$ 505,000 }\
\text {-U.S. \$ 36,700}\
\text {+U.S. \$447,900}\
\end{array}
\end{array}$
 What is the portfolio weight of the Euro in this FI's portfolio of foreign currency?
A)+0.18 percent.
B)-36.62 percent.
C)+75.20 percent.
D)-5.47 percent.

Quizplus · Accepted Answer

Portfolio weight of Euro = $U.S. in Euro/total FX exposure
 -245,900/671,500 = -0.3662. The portfolio weight of the Euro is calculated as the net position in Euro divided by the total net position in all currencies. The total net position is the sum of the net positions in all currencies, which is +U.S. $1,200 + (-U.S. $245,900) + (+U.S. $505,000) + (-U.S. $36,700) + (+U.S. $447,900) = +U.S. $715,000. The net position in Euro is -U.S. $245,900. Therefore, the portfolio weight of the Euro is -U.S. $245,900 / +U.S. $715,000 = -34.42%.

The Following Are the Net Currency Positions of a U