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What will be the net interest return on assets

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Question - Newcastle Temporary Bank recently made a one-year NZD$10 million loan that pays 10 percent interest annually. The loan was funded with a euro-denominated one-year deposit at an annual rate of 8 percent. The current spot rate is Eur1.60/$1.

(i) What will be the net interest income in dollars on the one-year loan if the spot rate at the end of the year is Eur1.58/$1?

(ii) What will be the net interest return on assets?

Reference no: EM132986427

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