Bankone issued $ 200 million worth of one year CD liabilities in Brazilian reals at a rate of 6 50 percent The exchange rate of U S dollars for Brazilian reals at the time of the transaction was $ 1 00 Br 1 a Is Bankone exposed to an appreciation or depreciation of the U S dollar relative to the Br...

a Bankone is exposed to a depreciation of the dollar relative to the ...

Bankone issued $ 200 million worth of one-year CD liabilities in Brazilian reals at a rate of

Question:

Bankone issued $ 200 million worth of one-year CD liabilities in Brazilian reals at a rate of 6.50 percent. The of U.S. dollars for Brazilian reals at the time of the transaction was $ 1.00/Br 1.
a. Is Bankone exposed to an appreciation or depreciation of the U.S. dollar relative to the Brazilian real?
b. What will be the percentage cost to Bankone on this CD if the dollar depreciates relative to the Brazilian real such that the of U.S. dollars for Brazilian reals is $ 1.2/Br 1 at the end of the year?
c. What will be the percentage cost to Bankone on this CD if the dollar appreciates relative to the Brazilian real such that the of U.S. dollars for Brazilian reals is $ 0.9/Br 1 at the end of the year?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...