A US Bank Converted $1 Million to Swiss Francs to Make

question 20

Multiple Choice

A U.S. bank converted $1 million to Swiss francs to make a Swiss franc loan to a valued corporate customer when the exchange rate was 1.2 francs per dollar. The borrower agreed to repay the principal plus 5 percent interest in one year. The borrower repaid Swiss francs at loan maturity and when the loan was repaid the exchange rate was 1.3 francs per dollar. What was the bank's dollar rate of return?

• A)26.00 percent
• B)−2.69 percent
• C)7.14 percent
• D)−3.08 percent
• E)5.00 percent

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Definitions:

Biological Psychology

The study of the biological underpinnings of cognitive, emotional, and behavioral processes.

Head Injuries

Physical trauma to the head, which can affect the brain and lead to a range of symptoms, from mild to severe.

Abstract-Reasoning Skills

The skill to examine data, identify trends and links, and address issues at a sophisticated, conceptual stage.

Social-Cultural Perspective

An approach in psychology that examines how social, cultural, and environmental variables influence individuals' behavior and thought processes.