User Account

All Pages

What is the net interest income earned in dollars

Assignment Help Finance Basics
Reference no: EM131632830

Question: Sun Bank USA has purchased a 16 million one-year Australian dollar loan that pays 12 percent interest annually. The spot rate of U.S. dollars for Australian dollars is $0.625/ A$1. It has funded this loan by accepting a British pound (BP)-denominated deposit for the equivalent amount and maturity at an annual rate of 10 percent. The current spot rate of U.S. dollars for British pounds is $1.60/£1. ( LG 9-5

a. What is the net interest income earned in dollars on this one-year transaction if the spot rate of U.S. dollars for Australian dollars and U.S. dollars for BPs at the end of the year are $0.588/A$1 and $1.848/£1, respectively?

b. What should the spot rate of U.S. dollars for BPs be at the end of the year in order for the bank to earn a net interest income of $200,000 (disregarding any change in principal values)?

Reference no: EM131632830

Questions Cloud

Different challenges the rapid urbanization of open space : Cities and urban planners are faced with many different challenges due to the rapid urbanization of open space
How would you weigh prioritizing improving the knowledge : Discussion- How would you weigh prioritizing improving the knowledge of teachers versus the knowledge of students?
How do integration and scope management combine : How do Integration and Scope Management combine to contribute to better project management?
Are political parties or interest group more important : Are political parties or interest group more important in the modern political system? Why and how did you come up with that decision?
What is the net interest income earned in dollars : What is the net interest income earned in dollars on this one-year transaction if the spot rate of U.S. dollars for Australian dollars.
What is the impact of this transaction on this year : What is the impact of this transaction on this year's and next year's income statement and income tax expense
Manage the various disciplines : If you were a project manager how would you best manage the various disciplines and subject matter experts in terms of specifying the deliverables
What should the spot rate of us dollars be : What should the spot rate of U.S. dollars for C$s be in order for the bank to earn a net interest income of $125,000?
Write a paper on a healthcare innovation : Write a 700- to -1,050-word paper on a healthcare innovation. Discuss if you believe the health care innovation will increase or decrease health care spending.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd