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Answer: Open positions in a currency
**Open positions in a currency** create direct exposure to changes in exchange rates, so they contribute the most to FX risk. The other activities are generally related to hedging, settlement of trade flows, or facilitating investment activity, which are less directly speculative than holding an open currency position.
Author: Manit Arora
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Question 192.3. According to Saunders, which of the four trading activities most contributes to foreign exchange (FX) risk exposure?
A
Open positions in a currency
B
Purchase and sale of currencies for hedging purposes
C
Purchase and sale of currencies to complete international transactions
D
Facilitating positions in foreign real and financial investments
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