What is the banks net exposure in dollars

Assignment Help Financial Management
Reference no: EM13882418

Suppose that Commerce Bank in Poland holds $ 400 in assets and $ 1,000 in liabilities denominated in dollars. The home currency is the zloty, and the current spot exchange rate is $ 1 = 145 zlotys.

a. What is the bank's net exposure in dollars?

b. Will the bank gain or lose if the spot exchange rate changes to $ 1 = 150 zlotys? Calculate the gain or loss.

c. Will the bank gain or lose if the spot exchange rate changes to $ 1 = 140 zlotys? Calculate the gain or loss.

Reference no: EM13882418

Questions Cloud

Kimberly farms purchased custom made harvesting machinery : 1.On June 30, 2013, Kimberly Farms purchased custom made harvesting machinery from a local producer.
What is accounting : Question: What is accounting? What are its features, objective & functions?
How do they differ from edge act and agreement corporations : Why were IBFs created? How do they differ from Edge Act and Agreement corporations?
Beldon corporation purchased land as a factory site : 1.On March 1, 2013, Beldon Corporation purchased land as a factory site for $60,000.
What is the banks net exposure in dollars : What is the bank's net exposure in dollars? Will the bank gain or lose if the spot exchange rate changes to $ 1 = 150 zlotys? Calculate the gain or loss. Will the bank gain or lose if the spot exchange rate changes to $ 1 = 140 zlotys? Calculate the ..
The organization of the corporation : 1.Freitas Corporation was organized early in 2013. The following expenditures were made during the first few months of the year:
Describe the it controls that volpner should include : Describe the IT controls that Volpner should include when it implements an internet EDI system. For each control you suggest, describe the intended purpose of the control.
The price elasticity of demand : Do you think the price elasticity of demand for Ford sport-utility vehicles (SUVs) will increase, decrease, or remain the same when each of the following events occurs? Explain your answer.
Can a trader earn covered interest arbitrage profits : Assume that the forward exchange rate is for 90 days forward and the interest rates are annualized 90- day rates in Question 9. Can a trader earn covered interest arbitrage profits?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the convexity of this instrument

What are the duration and modified duration of a seven-year, 3.5 percent coupon rate, annual coupon payment, $1000 par value government note priced today to yield 3 percent to maturity. What is the convexity of this instrument?

  Explain what is the required rate of return on the stock

The company just paid a $1.80 dividend and plans to pay $1.86 next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return (%) on this stock?

  Coupon bond pays interest annually

A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000. What is the change in the price of this bond (give me a percentage change) if the market yield rises to 6% from the current yield of 4.5%?

  What is the dollar amount of taxes paid

Energizer Battery Manufacturers had sales of $2,000,000 in 2010 and their cost of goods sold represented 75 percent of sales. Selling and administrative expenses were 10 percent of sales. Depreciation expense was $100,000 and interest expense for the..

  How much will the bank earn over the next year

A bank borrows money at the 5 year CD rate found in the paper with daily compounding. It loans money at the 15 year mortgage rate in the paper which is compounded monthly. If the bank borrows $10,000,000 from depositors and loans the $10,000,000 out ..

  What is the average direct labor cost rate

What is the average direct labor cost rate and What is the overhead rate.

  Aims1 to allow students to explore in greater detail the

aims1. to allow students to explore in greater detail the major learning outcomes of the module and to demonstrate a

  Issued some new preferred stock

ABC Corp. just issued some new preferred stock. The issue will pay a $3 quarterly dividend in perpetuity, beginning 12 years from now. If the market requires a 8% return on this investment, how much does a share of preferred stock cost today?

  New investment that it plans to finance using one-third debt

The Walgreen Corporation is contemplating a new investment that it plans to finance using one-third debt. the firm can sell new $1000 par value bonds with a 15 year maturity at a price of $947 that carry a coupon interest rate of 12.8 percent that is..

  Yield earnings before interest and taxes

HoKus Corporation, a boutique clothing company, has asked for your advice on whether to invest $40 million in a new line of loungewear. The investment will yield earnings before interest and taxes of $10 million a year, and any depreciation on the pr..

  What is the stocks value per share

Smith Technologies is expected to generate $50 million in free cash flow next year, and FCF is expected to grow at a constant rate of 6% per year indefinitely. Smith has no debt or preferred stock, and its WACC is 15%. If Smith has 40 million shares ..

  The corporate bylaws are identical for all firms incorporate

The corporate bylaws are identical for all firms incorporated in a particular state. Corporate bylaws dictate a firm's behavior inside its home country and corporate charter outline rules for operating in foreign countries. For a manufacturing firm, ..

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