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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Bankone issued $200 million worth of one-year CD liabilities in Brazilian reals at a rate of 6.50 percent. The exchange rate of U.S. dollars for Brazillian reals at the time of the transaction was $1.00/Br 1.
( LG 9-5
a. Is Bank one exposed to an appreciation or depreciation of the U.S. dollar relative to the Brazillian real?
b. What will be the percentage cost to Bank one on this CD if the dollar depreciates relative to the Brazillian real such that the exchange rate of U.S. dollars for Brazillian reals is $1.2/Br 1 at the end of the year?
c. What will be the percentage cost to Bank one on this CD if the dollar appreciates relative to the Brazillian real such that the exchange rate of U.S. dollars for Brazillian reals is $0.9/Br 1 at the end of the year?
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