Question
First Nations Bank of Australia invests 50 million Euro in three-year maturity loans and partially funds these loans with 30 million Euro one-year deposits. Which
First Nations Bank of Australia invests 50 million Euro in three-year maturity loans and partially funds these loans with 30 million Euro one-year deposits. Which of the following risks is First Nations Bank exposed to:
Select one:
a. A depreciation of the euro against the Australian dollar plus credit risk plus refinancing risk, such as increasing interest rates in the Eurozone.
b. An appreciation of the euro against the Australian dollar plus credit risk plus refinancing risk, such as increasing interest rates in the Eurozone.
c. A depreciation of the euro against the Australian dollar plus credit risk plus reinvestment risk, such as decreasing interest rates in the Eurozone.
d. A depreciation of the euro against the Australian dollar reinvestment risk, such as increasing interest rates in the Eurozone.
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