Question $7(10$pts$)$: A U$.$S$.$ FI has US$$300$ million worth of one$-$year loans earning an average

rate of return of $7$ percent. The FI also has one$-$year single$-$payment Euro dollar loans of US $$100$

million earning $9$ percent. The FI's funding source is $$400$ million in US$ one$-$year CDs$,$ on which

they are paying $5$ percent. Initially the exchange rate is USD $1\mathrm{.}30$ per Euro $1.$ The one$-$year

forward rate is USD $1\mathrm{.}31$ per Euro $1.$ What is the bank's dollar percent spread if they hedge fully

using forwards?