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A German bank issues a one-year 2,000,000 CD at 2%. It uses these funds to make a one-year US $- denominated loan to ABC Corporation
A German bank issues a one-year 2,000,000 CD at 2%. It uses these funds to make a one-year US $- denominated loan to ABC Corporation at 4%. Current exchange rate is $1.15/. The one-year forward rate (F$/) = $1.17/. What are the bank's loan proceeds (in $s) from the loan (i.e. how much will the German bank receive in one-year from the loan)?
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$2,300,000
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$2,392,000
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$2,080,000
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$1,808,696
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