Citibank raises funds by issuing a one-year bond (liability of 100,000 at 3.5%. The funds are wed to finance a coe. year uss loan to a us company at 5%. The current exchange rate $1.50/. The one-year forward rate (Fs:c) $1.55/E. What is Citibank's exposure? If Citibank hedges its foreign exchange exposure using the forward contract. what would be the net revenue lloss from these transactions IS proceeds from loan - cost of fundingl? Would the Citibank manager choose to make these transactions? Citibank is expesed to the depreciation of the E Gain of $2,925 : Yes, the transctions would be proftable Citibank is exposed to the appeeciation of the E : Los of $2.925 : No, the cransactions would not be proticabie: Citibank is exposed to the appreciation of the : Gain of $2,925; Yes, the transactions would be prohitable. Citibank is exposed to the depreciation of the f: Loss of $2.925; Na, the transactions would hot be profitable