3. Alpha Fund Incs latest financial statements showed that there is a major currency mismatch in its portfolio as follows :

Assets Liabilities

50 million U.S. loans; 1-year maturity in USD, yielding 8%. 100 million U.S. short-term loans; 1-year maturity in USD, yielding 6%

USD50 million equivalent Currency A loans; 1-year maturity made in Currency A, yielding 13%

a. Assuming the FX position unhedged, and the spot FX rate has not changed over the 1 year period and remains at USD1.70/A, what transactions must the firm undertake to make the Currency A-denominated loan given in the financial statements ? What is the weighted return on the firms assets and its net return ? (You must show the transactions clearly)

b. Suppose that at the end of the year, Currency A depreciated against USD and the exchange rate becomes USD1.55/A, recalculate the weighted return on the firms assets and its net return.

3. Alpha Fund Inc's latest financial statements showed that there is a major currency mismatch in its portfolio as follows: Assets Liabilities 50 million U.S. loans; 1-year 100 million U.S. short-term loans; 1-year maturity in maturity in USD, yielding 8%. USD, yielding 6% 4 USD50 million equivalent Currency A loans; 1-year maturity made in Currency A, yielding 13% | a. Assuming the FX position unhedged, and the spot FX rate has not changed over the 1 year period and remains at USD1.70/A, what transactions must the firm undertake to make the Currency A- denominated loan given in the financial statements ? What is the weighted return on the firm's assets and its net return? (You must show the transactions clearly) b. Suppose that at the end of the year, Currency A depreciated against USD and the exchange rate becomes USD1.55/A, recalculate the weighted return on the firm's assets and its net return. 3. Alpha Fund Inc's latest financial statements showed that there is a major currency mismatch in its portfolio as follows: Assets Liabilities 50 million U.S. loans; 1-year 100 million U.S. short-term loans; 1-year maturity in maturity in USD, yielding 8%. USD, yielding 6% 4 USD50 million equivalent Currency A loans; 1-year maturity made in Currency A, yielding 13% | a. Assuming the FX position unhedged, and the spot FX rate has not changed over the 1 year period and remains at USD1.70/A, what transactions must the firm undertake to make the Currency A- denominated loan given in the financial statements ? What is the weighted return on the firm's assets and its net return? (You must show the transactions clearly) b. Suppose that at the end of the year, Currency A depreciated against USD and the exchange rate becomes USD1.55/A, recalculate the weighted return on the firm's assets and its net return