Question
JP Morgan Chase makes a 100M, three-year loan at 5%. This loan is funded by issuing US $-denominated 1-year certificates of deposit (CDs) at 3%.
JP Morgan Chase makes a 100M, three-year loan at 5%. This loan is funded by issuing US $-denominated 1-year certificates of deposit (CDs) at 3%. Holding all else constant, which of the following will adversely affect JP Morgans profits from these transactions?
a. Interest rates in the US increase as a result of the Feds contractionary monetary policies.
b. The US dollar depreciates against the Euro during the term of the loan contract.
c. The Euro () appreciates against the US dollar during the term of the loan contract.
d. None of the above.
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Real Estate Finance And Investments
Authors: William Brueggeman, Jeffrey Fisher
13th Edition
0073524719, 9780073524719
