SIE practice questionmediumCurrency/exchange rate risk
Which investor faces currency risk?
- AInvestor in a domestic S&P 500 ETF
- BInvestor in a foreign sovereign bond denominated in euros✓ Correct answer
- CInvestor in a U.S. municipal bond
- DInvestor in a fixed annuity
Explanation
Why B — Investor in a foreign sovereign bond denominated in euros
Foreign-denominated assets are subject to currency risk, as exchange rates may fluctuate. Domestic holdings (A, C, D) are unaffected by currency changes.
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