Using the information in part 4, calculate the return on the FI€™s loan portfolio, the average cost of funds, and the net interest margin for the FI if the pound spot foreign exchange rate rises to $1.70/£1 and the lira spot foreign exchange rate falls to $0.58/TRY1 over the year.

The promised one-year U.S. CD rate is 4 percent, to be paid in dollars at the end of the year; the one-year, default risk€“free loans in the United States are yielding 6 percent; default risk€“free one-year loans are yielding 8 percent in the United Kingdom; and default risk€“free one-year loans are yielding 10 percent in Turkey. The exchange rate of dollars for pounds at the beginning of the year is $1.6/£1, and the exchange rate of dollars for Turkish lira at the beginning of the year is $0.5533/TRY1.

Assets Liabilities $1,000 million S500 million U.S. loans (one year) in dollars S300 million equivalent U.K. loans (one year) doans made in pounds) S200 million equivalent Turkish loans (one year) lons made in Turkish lira) U.S. CDs (one year) in dollars