To find the Financial Institution's (FI's) net exposure in Swiss francs (Sf), both in Swiss francs and in dollars, we’ll follow these steps:

1. Net Exposure Calculation in Swiss Francs (Sf): The net exposure in a particular currency can be calculated by summing the assets and foreign exchange (FX) bought, then subtracting the liabilities and FX sold.

   For Swiss francs: $\text{Net Exposure (Sf)} = (\text{Assets} + \text{FX Bought}) - (\text{Liabilities} + \text{FX Sold})$

   Plugging in the values: $\text{Net Exposure (Sf)} = (127,500 + 10,200) - (51,000 + 15,300)$ $= 137,700 - 66,300$ $= 71,400 \, \text{Sf}$

2. Net Exposure Calculation in Dollars ($): Convert the net exposure in Swiss francs to dollars using the exchange rate (Sf to $ is 0.98).

   $\text{Net Exposure (US dollars)} = 71,400 \times 0.98$ $= 69,972 \, \text{dollars}$

Final Answer:

• Net Exposure (Swiss Francs): 71,400 Sf
• Net Exposure (US dollars): 69,972 $

Would you like further details on any of these calculations?

Here are 5 related questions to deepen understanding:

1. How would the net exposure change if the Swiss franc exchange rate fluctuates?
2. What impact would increasing the FX bought position have on net exposure?
3. How can FI use hedging to manage its currency exposure?
4. How do foreign assets and liabilities affect FI’s risk profile?
5. What would happen if the Swiss franc depreciated against the dollar?

Tip: Exchange rates can have a significant effect on net exposures; monitoring rates is essential for managing currency risk.