Question 3(a): Suppose an Italian bank has short-term borrowings of 300 million euro and 200 million U.S. dollars and made long term loans of 400 million euro and 150 million U.S. dollars. The euro-dollar exchange rate is initially $1.50 per euro. If the euro-dollar exchange rate moved to $1.60 per euro, would the bank gain or lose? Provide calculations to support your answer (4 marks) Question 3(b): A lottery claims its grand prize is $25 million, payable over five years at $5,000,000 per year. If the first payment is made immediately, and the next 4 payments at the end of year 1, year 2, year 3 and year 4, what is this grand prize really worth? Use an interest rate of 8%