14-79 If in one year there is no change to either interest rates or exchange rates,what is the end-of-year profit or loss for the bank? (Hint: Annual interest is paid on both the Canadian bonds and the CD on the date of liquidation in exactly one year.)
A)Profit of US$ 20,000.
B)Loss of C$ 224,000.
C)Profit of US$ 50,000.
D)Profit of C$ 63,700.
E)Profit of US$313,000.

Question

Quizplus · Accepted Answer

The bank earns interest on both the Canadian bonds and the CD. Without changes in interest or exchange rates, the profit is calculated based on the interest earned, resulting in a profit of US$ 20,000.

14-79 If in One Year There Is No Change to Either