Question 2 (16 marks) (a) A U.S. bank lends 80 million when the $/ exchange rate is US$1.1. The interest rate is fixed at 7% and the loan is for one year. Calculate the bank's dollar rate of return on the loan if exchange rate of Euros is US$1.08 one year later. (4 marks) (b) Explain how the refinancing risk faced by financial institutions can lead to insolvency risk. (3 marks) (c) Explain how credit risk is related to liquidity risk. (4 marks) (d) Identify FIVE differences between large and small commercial banks. (5 marks)