Which of the Following Statements Is True

Multiple Choice

Which of the following statements is true?

A) By directly matching its foreign asset and liability book, an FI can lock in a positive return on profit spread if exchange rates rise over the investment period.
B) By directly matching its foreign asset and liability book, an FI can lock in a positive return on profit spread if exchange rates fall over the investment period.
C) By directly matching its foreign asset and liability book, an FI can lock in a positive return on profit spread whichever direction exchange rates change over the investment period.
D) By directly matching its foreign asset and liability book, an FI holds a neutral position, i.e. earnings equalling zero, whichever direction exchange rates change over the investment period.