Lucky Bank is an American Bank based in U.S.A. Lucky Bank has the following assets and liabilities.

Assets

$100 Million U.S. loans (one year) in dollars

$100 Million equivalent Swiss loans (one year) in Swiss francs

Liabilities

$200 Million U.S. CDs (one year) in dollars

Suppose the bank will pay 7% on its CDs in dollars at the end of the year.

Suppose the bank will receive 8% on its one-year loans in U.S. dollars, and the bank will receive 12% on its one-year loans in Swiss franc.

At the beginning of the one year period, the value of one Swiss franc is 1.2 U.S. dollars. At the end of the period the value of one Swiss franc is 1.1 U.S. dollars.

a) Does Lucky Bank match the maturity of its assets and liabilities?

b) Does Lucky Bank match its foreign currency asset-liability book?

c) Calculate the dollar return on Lucky Bank's Swiss francs investment? (Show your calculations)

d) Calculate the weighted return on Lucky Bank's portfolio of investments? (Show your calculations)

e) Does this bank make a profit or a loss on its portfolio of investments? Why? (Show your calculations)