The average duration of the loans is 10 years.The average duration of the deposits is 3 years. $$\begin{array} { | l | r | l | r | }
\hline \text { Consumer loans } & \$ 50 \text { million } & \text { Deposits } & \$ 235 \text { million } \
\hline \text { Commercial Loans } & \$ 200 \text { million } & \text { Equity } & \$ 15 \text { million } \
\hline \text { Total Assets } & \$ 250 \text { million } & \text { Total Liabilities \& Equity } & \$ 250 \text { million } \
\hline
\end{array}$$ What is the net gain or loss on the loan given that the exchange rates at the time of repayment were $1.63/? in the cash market and 1.62/? in the futures market? Assume that the futures position is opened and unwound as stated in previous question.
A)$2,120,000 loss.
B)$1,330,000 loss.
C)$2,670,000 loss.
D)$1,330,000 gain.
E)$2,670,000 gain.

Question

The average duration of the loans is 10 years.The average duration of the deposits is 3 years. $$\begin{array} { | l | r | l | r | } 
\hline \text { Consumer loans } & \$ 50 \text { million } & \text { Deposits } & \$ 235 \text { million } \
\hline \text { Commercial Loans } & \$ 200 \text { million } & \text { Equity } & \$ 15 \text { million } \
\hline \text { Total Assets } & \$ 250 \text { million } & \text { Total Liabilities \& Equity } & \$ 250 \text { million } \
\hline
\end{array}$$ What is the net gain or loss on the loan given that the exchange rates at the time of repayment were $1.63/? in the cash market and 1.62/? in the futures market? Assume that the futures position is opened and unwound as stated in previous question.
A)$2,120,000 loss.
B)$1,330,000 loss.
C)$2,670,000 loss.
D)$1,330,000 gain.
E)$2,670,000 gain.

Quizplus · Accepted Answer

The Answer of The average duration of the loans is 10 years.The average duration of the deposits is 3 years. $$\begin{array} { | l | r | l | r | } 
\hline \text { Consumer loans } & \$ 50 \text { million } & \text { Deposits } & \$ 235 \text { million } \
\hline \text { Commercial Loans } & \$ 200 \text { million } & \text { Equity } & \$ 15 \text { million } \
\hline \text { Total Assets } & \$ 250 \text { million } & \text { Total Liabilities \& Equity } & \$ 250 \text { million } \
\hline
\end{array}$$ What is the net gain or loss on the loan given that the exchange rates at the time of repayment were $1.63/? in the cash market and 1.62/? in the futures market? Assume that the futures position is opened and unwound as stated in previous question.
A)$2,120,000 loss.
B)$1,330,000 loss.
C)$2,670,000 loss.
D)$1,330,000 gain.
E)$2,670,000 gain.

The Average Duration of the Loans Is 10 Years What Is the Net Gain or Loss on the Loan