Financial Risk Manager Part 1

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Explanation:

Correct answer: B) Loss of $592

First find the net long position in Brazilian reais:

(125{,}000 - 78{,}000) + (27{,}000 - 5{,}000) = 69{,}000 \text{ BRL}

So the bank is long BRL. A long position loses value when the BRL depreciates.

A 3.0% depreciation implies a loss of:

69{,}000 \times 0.03 = 2{,}070 \text{ BRL}

Convert that loss to USD using the spot rate 3.497 BRL per USD:

2{,}070 / 3.497 = 591.94 \approx 592

Thus, the approximate loss is $592.

Explanation:

Correct answer: B) Loss of $592

First find the net long position in Brazilian reais:

(125{,}000 - 78{,}000) + (27{,}000 - 5{,}000) = 69{,}000 \text{ BRL}

So the bank is long BRL. A long position loses value when the BRL depreciates.

A 3.0% depreciation implies a loss of:

69{,}000 \times 0.03 = 2{,}070 \text{ BRL}

Convert that loss to USD using the spot rate 3.497 BRL per USD:

2{,}070 / 3.497 = 591.94 \approx 592

Thus, the approximate loss is $592.

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MManit

Last updated: April 18, 2026 at 11:32

a) Loss of $3,365

0.0%

b) Loss of $592

100.0%

c) Gain of $1,270

d) Gain of $4,822