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3, 4 and.5 please !!! Based on the information above, answer the following questions for a hedge and no hedge scenario. Assume the bank locks
3, 4 and.5 please !!!
Based on the information above, answer the following questions for a hedge and no hedge scenario. Assume the bank locks into the $1.20 forward to convert euros at the end of the period for the off balance sheet hedge. 1. Is this bank considered to be net short or net long? What type of forward would be used to hedge (long or short)? 2. What is the net interest income and net interest margin if the bank chooses not to hedge and the euro depreciates to $0.85 ? 3. What is the net interest income and net interest margin if the bank chooses not to hedge and the euro appreciates to $1.68 ? 4. What is the net interest income and net interest margin if the bank chooses to construct a forward hedge and the euro depreciates to $0.85 ? 5. What is the net interest income and net interest margin if the bank chooses to construct a forward hedge and the euro appreciates to $1.68Step by Step Solution
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