10 points) Name:____________

On September 26, 2018, Scales, LTD., issued a $200 million, one-year maturity CD denominated in Euros. On the same date, $120 million was invested in a Euro ()-denominated loan and $80 million was invested in a U.S. Treasury bill. The exchange rate on September 26, 2018 was 0.8108/$. Assume no repayment of principal, and an exchange rate on March 12, 2019 of 0.8501/$. Complete the table below for the balance sheets in both Dollars and Euros for both September 26, 2018 and March 12, 2019. Scales, LTD. may have lost or made money with its exposure to foreign currency risk, thus determine what actually happened? This problem is similar to problem 7-25 in your text.

Exchange rates may be found at: http://www.oanda.com/currency/historical-rates/

Solution matrix for problem

At Issue Date-9/26/2018: 0.8108/$

Dollar Transaction Values (in millions) Euro Transaction Values (in millions)

Euro Euro Euro Euro

Loan $120 CD $200 Loan _______ CD ________

U.S T-bill $80 U.S. T-bill _______

$200 $200 _______ ________

Today 3/12/2019: 0.8501/$

Dollar Transaction Values (in millions) Transaction Values (in millions)

Euro Euro Euro Euro

Loan $______ CD $_______ Loan ________ CD _________

U.S. T-bill $40_ U.S. T-bill ________

$______ $_______ ________ _________

Gainor Loss of $______ Gain or Loss of ______