Bankone issued $200 million worth of one-year CD liabilities in Brazilian reals at a rate of 6.50 percent. The exchange

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answerhappygod
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Bankone issued $200 million worth of one-year CD liabilities in Brazilian reals at a rate of 6.50 percent. The exchange

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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 Brazilian reals at the time of the transaction was
$0.305/Br 1.
A. What will be the percentage cost to Bankone on this CD if the
dollar depreciates relative to the Brazilian real such that the
exchange rate of U.S. dollars for Brazilian reals is $0.325/Br 1 at
the end of the year?
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