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 banks net exposure in dollars b Will the bank gain or lose if the spot exchange rate change...

Commerce Bank Poland a Net exposure in dollars nexp d 4 ...

Suppose that Commerce Bank in Poland holds $ 400 in assets and $ 1,000 in liabilities denominated

Question:

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 is $ 1 = 145 zlotys.
a. What is the bank’s net exposure in dollars?
b. Will the bank gain or lose if the spot changes to $ 1 = 150 zlotys? Calculate the gain or loss.
c. Will the bank gain or lose if the spot changes to $ 1 = 140 zlotys? Calculate the gain or loss.
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...