Question: Question 7 ( 1 0 pts ) : A U . S . FI has US$ 3 0 0 million worth of one - year

Question 7(10pts): A U.S. FI has US$300 million worth of one-year loans earning an average
rate of return of 7 percent. The FI also has one-year single-payment Euro dollar loans of US $100
million earning 9 percent. The FI's funding source is $400 million in US$ one-year CDs, on which
they are paying 5 percent. Initially the exchange rate is USD 1.30 per Euro 1. The one-year
forward rate is USD 1.31 per Euro 1. What is the bank's dollar percent spread if they hedge fully
using forwards?
Question 7(10pts): A U.S. FI has US$300 million worth of one-year

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