Assume a Bank Accepts Deposits in Australian Dollars (A$) and Makes

question 53

Multiple Choice

Assume a bank accepts deposits in Australian dollars (A$) and makes some fixed-rate loans in British pounds. Which of the following would reduce the bank's profit margin?

• A) The A$ appreciates against the pound.
• B) The A$ is stable against the pound.
• C) The A$ depreciates against the pound.
• D) British interest rates increase.
• E) C and D

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