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The is worth 1.2069 euros and the euro is worth $1.0268. Statistical analysis indicates that when the euro rises 1 percent against the dollar, the
The is worth 1.2069 euros and the euro is worth $1.0268. Statistical analysis indicates that when the euro rises 1 percent against the dollar, the pound rises 0.5 percent against the euro and vice versa. A U.S. bank has assets of 40 million that mature in one year funded with liabilities of E55 million due in six months. The bank would be hurt by 1. an increase in the value of the euro against the dollar. II. a decrease in the value of the euro against the dollar. III. an increase in euro interest rates relative to pound interest rates. IV. an increase in pound interest rates relative to euro interest rates
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