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Bank USA recently purchased $10.2 million worth of euro-denominated one-year CDs that pay 11 percent interest annually. The current spot rate of U.S. dollars for

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Bank USA recently purchased $10.2 million worth of euro-denominated one-year CDs that pay 11 percent interest annually. The current spot rate of U.S. dollars for euros is $1.104/C. a. Is Bank USA exposed to an appreciation or depreciation of the dollar relative to the euro? b. What will be the return on the one-year CD if the dollar appreciates relative to the euro such that the spot rate of U.S. dollars for euros at the end of the year is $1.004/61 ? (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g. 32.161)) c. What will be the return on the one-year CD if the dollar depreciates relative to the euro such that the spot rate of U.S. dollars for euros at the end of the year is $1.204/Cl2 (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161))

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