Question
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/. If the bank manager hedges its exposure using the forward contract, what are the bank's net proceeds (in s) from the transaction? [Hint: do not forget to compute the cost of the CD].
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+ 76,174
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0
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+ 4,444
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- 4,444
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Gapenski's Healthcare Finance An Introduction To Accounting And Financial Management
Authors: Kristin L. Reiter, Paula H. Song
7th Edition
1640551867, 9781640551862
