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If the Year-End Spot Exchange Rate for the British Pound

Question 1

Multiple Choice

If the year-end spot exchange rate for the British pound is $1.50/£ and the liabilities pay 8 percent, what is the maximum that the € can appreciate and the bank still maintain a zero profit?


A) €1.30/$.
B) €1.33/$.
C) €1.35/$.
D) €1.50/$.
E) €1.60/$.

Correct Answer:

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