Six months ago, Qualitybank issued a $ 100 million, one-year-maturity CD, denominated in British pounds (Euro CD).

Question:

Six months ago, Qualitybank issued a $ 100 million, one-year-maturity CD, denominated in British pounds (Euro CD). On the same date, $ 60 million was invested in a £-denominated loan and $ 40 million in a U.S. Treasury bill. The exchange rate on this date was £ 1.5382 for $ 1. If you assume no repayment of principal and if today’s exchange rate is £ 1.1905 for $ 1:

a. What is the current value of the Euro CD principal in dollars and pounds?

b. What is the current value of the British loan principal in dollars and pounds?

c. What is the current value of the U. S. Treasury bill in dollars and pounds?

d. What is Qualitybank’s profit/ loss from this transaction in dollars and pounds?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...