Which of the following statements are true about exchange rate risk? Check all that apply: a)A Canadian investor with an investment in U.S Treasury bills faces exchange rate risk. b)Exchange rate risk can be hedged using a futures or forward contract in foreign exchange. c)Exchange rate risk arises from the uncertainty in asset returns due to changes in the exchange rate between the currency of the investor and the foreign currency. d)Exchange rate risk can't be perfectly hedged, even if the return earned in the foreign currency is known beforehand.

If you consider the payoff from entering into a forward contract does the buyer have more to gain going long than the seller has to lose going short, profits if the price of the underlying at expiration exceeds the forward price and/or  gains from owning the underlying versus owning the forward contract are equivalent? Explain why one or more of the options above are correct. Secondly explain why, if any of the remaining options are incorrect.

Monetary policies refer to policies that affect the supply, demand, and value of the nation's currency.  True False

Which type of FI risk is described in this scenario?: A bank makes a loan to several companies in another country. The other country has a currency shortage and restricts payments to any firms outside of the company's home country.     Technology Risk     Market Risk     Sovereign Risk     Operational Risk