Six months ago, Qualitybank issued a $100 million, one-year maturity CD denominated in euros. On the same

Question:

Six months ago, Qualitybank issued a $100 million, one-year maturity CD denominated in euros. On the same date, $60 million was invested in a €-denominated loan and $40 million was invested in a U.S. Treasury bill. The exchange rate on this date was €1.5675/$. Assume no repayment of principal and an exchange rate today of €1.2540/$.

a. What is the current value of the CD principal (in euros and dollars)?

b. What is the current value of the euro-denominated loan principal (in euros and dollars)?

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

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

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... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...

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