A US Bank Has £50 Million in Deposits and Makes a a Loan

question 32

Multiple Choice

A U.S. bank has £50 million in deposits and makes a loan of £100 million when the exchange rate is $1 = £1. 5. If the exchange rate changes to $1 = £2, then the bank's net worth will change by

• A)+$8.33 million.
• B)+$16.67 million.
• C)-$8.33 million.
• D)-$16.67 million.

---

Definitions:

Federal Unemployment Tax

This is a tax paid by employers based on the wages paid to employees, intended to fund state workforce agencies.

Employer's Payroll Tax

Taxes that employers are required to pay on behalf of their employees, such as social security and Medicare taxes in the United States.

Unemployment Taxes

Taxes paid by employers to fund unemployment insurance programs, providing benefits to workers who have lost their jobs.

Payroll Tax Expense

Financial charges imposed on employers based on the wages and salaries paid to employees.