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

Question

Quizplus · Accepted Answer

If the Australian dollar appreciates against the pound, the bank will receive less in pounds when converting the interest payments from the loans back to Australian dollars, reducing its profit margin.

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