The promised one-year U.S. CD rate is 4 percent, to be paid in dollars at the end of the year; the oneyear, default risk-free loans are yielding 6 percent in the United States; and one-year, default risk-free loans are yielding 10 percent in Germany. The exchange rate of dollars for euros at the beginning of the year is $1.25/1. Required: a. Calculate the dollar proceeds from the German loan at the end of the year, the return on the FI's investment portfolio, and the net return for the FI if the spot foreign exchange rate falls to $1.15/1 over the year. (4 marks) b. Calculate the dollar proceeds from the German loan at the end of the year, the return on the Fl's investment portfolio, and the net return for the FI if the spot foreign exchange rate rises to $1.35/1 over the year. (4 marks) c. The spot foreign exchange rates falls to $1.15/1 over the year. However, at the beginning of the year, the FI sold a euro forward contract for converting the euro proceed into the U.S. dollars at the year end. The exchange rate in this contract is $1.25/1. Calculate the dollar proceeds from the German loan at the end of the year, the return on the Fl's investment portfolio, and the net return for the Fl. ( 3 marks) d. Suppose that instead of funding the $200 million investment in 10 percent German loans with U.S. CDs, the FI manager funds the German loans with $200 million equivalent one-year euro CDs at a rate of 7 percent. Now the balance sheet of the FI would be as follows: the Fl if the spot foreign exchange rate falls to $1.15/1 over the year. ( 5 marks)