Interest income from foreign assets

Assignment Help Finance Basics
Reference no: EM133115120

Assume that a bank has assets located in the EU worth 101 million euros, on which it earns an average of 9% per year. The bank has 76 million Euros in liabilities on which pays an average of 5% per year. The spot exchange rate is 0.76 euros/$. If the exchange rate at the end of the year is 0.79euros/$, will the dollar have appreciated or depreciated against the euro? Given the change in the exchange rate, what is the effect in dollars on the net interest income from foreign assets and liabilities?

Reference no: EM133115120

Questions Cloud

Understanding of the impact of interest rates : The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (Credit Card Act) made major changes in the way and amount of information that is pro
Relationship between the capital base of banks : Discuss the relationship between the capital base of banks and the 2007-2010 financial crisis and great recession.
Calculate the approximate real rate of return : For this same bond in (a), if the current inflation rate is 4.5%, calculate the approximate real rate of return then the exact real rate
What is the npv associated with the transaction : Assume the following values: One time transaction for a sale of $250,000
Interest income from foreign assets : Assume that a bank has assets located in the EU worth 101 million euros, on which it earns an average of 9% per year. The bank has 76 million Euros in liabiliti
How much goodwill will result from this transaction : Jungleland's assets and liabilities had the following appraised values immediately prior to the acquisition: land, $2.8 million; How much goodwill will result
Describe the major types of exclusions : a. List and describe the major types of exclusions typically found in insurance contracts.
Implications of managing the financial planning : Your family members are discussing with you for the family financial planning. Please list down 5 major discussion points (ie., risk/return and etc.) to help yo
Vote to adopt enact new law : Your state has a forthcoming referendum (a vote to adopt a enact a new law) concerning no smoking in public places including bars and restaurants

Reviews

Write a Review

Finance Basics Questions & Answers

  Primary responsibilities of the financial manager

What are the primary responsibilities of the financial manager?

  Explain the purpose of the calculation

Explain the calculations in each of the three panels below, one at a time. Explain the purpose of the calculation and the procedure of the calculation, i.e., how the data inputs determine the output - the result. Bond Questions Support Sheets.xlsx (p..

  What is the corresponding period rate

Your car dealer says that the interest rate on car loans is 14% APR. What is the corresponding period rate?

  Role of corporate risk management

Consider a publicly traded company that runs gas stations. Its largest expense is the cost of gas. Should the company manage the risk of changing gas prices by

  What is the amount of expected dividend

ABC Inc. last paid an annual dividend of $14.2.The dividends are expected to grow by 3.4% each year. What is the amount of expected dividend in Year 10.

  Compute the new price of the bond

Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 25-year life when issued and the annual interest payment

  What is pay-off and profit-loss

When the option expires, the value of the underlying asset is $54. What is your pay-off and profit / loss?

  Country risk analysis and possible exit strategies

Describe one exit strategy that an organization can use when things go wrong in a foreign country? What are some of the issues which might prompt the implementation of an exit strategy?

  What are the five-day rar and es for the portfolio

Assume that the daily volatilities of both assets are 1% and that the coefficient of correlation between their returns is 0.4. What are the five-day 94% RaR an

  Approaches of full replication and stratified sampling

In constructing an indexed portfolio, explain the approaches of full replication and stratified sampling.

  Walther enterprises has accounts receivable of 52700 total

the fruit co. has total assets of 7800 fixed assets of 7100 current liabilities of 1500 and long-term liabilities of

  How much interest will she pay on loan

This loan comes with a 5 year term. What is her monthly payment, and how much interest will she pay on this loan? Show all work.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd