The $\backslash (\backslash )$ is worth $1\mathrm{.}2569$ euros and the euro is worth $\backslash (\backslash$$ $1\mathrm{.}5568\backslash ).$ Statistical analysis indicates that when the euro rises $1$ percent against the dollar, the pound rises $0\mathrm{.}5$ percent against the euro and vice versa. A U$.$S$.$ bank has assets of $\backslash (40\backslash )$ million that mature in one year funded with liabilities of $\backslash (55\backslash )$ million due in slx months. The bank would be hurt by

I. an Increase in the value of the euro against the dollar.

II$.$ a decrease in the value of the euro against the dollar.

III. an Increase in euro interest rates relative to pound interest rates.

IV$.$ an increase in pound interest rates relative to euro interest rates.

Multiple Choice

I and II only

I and III only

I only

II and IV only

II and III only