Banking Portfolio Analysis: Loan Performance, Returns, and Risk

This assignment analyzes a banking portfolio consisting of US, UK, and Turkish loans. The solution calculates the return on the portfolio under different scenarios, considering varying interest rates and exchange rates. The analysis includes detailed tables showing the beginning and ending values of assets in each currency, along with the impact of exchange rate fluctuations on the overall portfolio return. The assignment explores how changes in exchange rates affect the value of assets and the net return on the portfolio. The solution provides a comprehensive overview of the portfolio's performance, offering valuable insights into risk assessment and financial modeling within the banking sector. The assignment covers different scenarios, each with a unique set of interest and exchange rates to illustrate their effects on the portfolio's profitability. The final section provides a bibliography of relevant financial literature.

Running head: BANKING
Banking
Name of the Student:
Name of the University:
Author’s Note

1
BANKING
Table of Contents
Answer to Question 1:.....................................................................................................................2
Answer to Question 2:.....................................................................................................................2
Answer to Question 3:.....................................................................................................................3
Answer to Question 4:.....................................................................................................................3
Answer to Question 5:.....................................................................................................................4
Answer to Question 6:.....................................................................................................................5
Bibliography:...................................................................................................................................7

2
BANKING
Answer to Question 1:
Particulars US Loans
UK loans in
pounds
Turkish loans
in Lira Total
Beginning value
50,00,00,00
0.00
30,00,00,000.
00
20,00,00,000.0
0
1,00,00,00,0
00.00
Beginning exchange rate 1.00 1.60 0.55
Beginning value of assets in
foreign currency
50,00,00,00
0.00
18,75,00,000.
00
36,14,67,558.2
9
Interest rate 7% 8% 10%
Value of assets at the end of
the year
53,50,00,00
0.00
20,25,00,000.
00
39,76,14,314.1
2
Ending exchange rate 1.00 1.60 0.55
Ending value of the assets in
USD
53,50,00,00
0.00
32,40,00,000.
00
22,00,00,000.0
0
1,07,90,00,0
00.00
Return on portfolio 7.90%
Net return on portfolio 3.90%
Answer to Question 2:
Particulars US Loans
UK loans in
pounds
Turkish loans
in Lira Total
Beginning value
50,00,00,00
0.00
30,00,00,000.
00
20,00,00,000.0
0
1,00,00,00,0
00.00
Beginning exchange rate 1.00 1.60 0.55
Beginning value of assets in
foreign currency
50,00,00,00
0.00
18,75,00,000.
00
36,14,67,558.2
9
Interest rate 7% 8% 10%
Value of assets at the end of
the year
53,50,00,00
0.00
20,25,00,000.
00
39,76,14,314.1
2
Ending exchange rate 1.00 1.45 0.52
Ending value of the assets in

3
BANKING
USD
53,50,00,00
0.00
29,36,25,000.
00
20,67,59,443.3
4
1,03,53,84,4
43.34
Return on portfolio 3.54%
Net return on portfolio -0.46%
Answer to Question 3:
Particulars US Loans
UK loans in
pounds
Turkish loans
in Lira Total
Beginning value
50,00,00,00
0.00
30,00,00,000.
00
20,00,00,000.0
0
1,00,00,00,0
00.00
Beginning exchange rate 1.00 1.60 0.55
Beginning value of assets in
foreign currency
50,00,00,00
0.00
18,75,00,000.
00
36,14,67,558.2
9
Interest rate 7% 8% 10%
Value of assets at the end of
the year
53,50,00,00
0.00
20,25,00,000.
00
39,76,14,314.1
2
Ending exchange rate 1.00 1.70 0.58
Ending value of the assets in
USD
53,50,00,00
0.00
34,42,50,000.
00
23,06,16,302.1
9
1,10,98,66,3
02.19
Return on portfolio 10.99%
Net return on portfolio 6.99%
Answer to Question 4:
Particulars US Loans
UK loans in
pounds
Turkish loans
in Lira Total
Beginning value
50,00,00,00
0.00
30,00,00,000.
00
20,00,00,000.0
0
1,00,00,00,0
00.00
Beginning exchange rate 1.00 1.60 0.55
Beginning value of assets in
foreign currency
50,00,00,00
0.00
18,75,00,000.
00
36,14,67,558.2
9
Interest rate 6% 5% 6%

4
BANKING
Answer to Question 5:
Particulars US Loans
UK loans in
pounds
Turkish loans
in Lira Total
Beginning value
50,00,00,00
0.00
30,00,00,000.
00
20,00,00,000.0
0
1,00,00,00,0
00.00
Beginning exchange rate 1.00 1.60 0.55
Beginning value of assets in
foreign currency
50,00,00,00
0.00
18,75,00,000.
00
36,14,67,558.2
9
Interest rate 6% 8% 10%
Value of assets at the end of
the year
53,00,00,00
0.00
20,25,00,000.
00
39,76,14,314.1
2
Ending exchange rate 1.00 1.45 0.52
Ending value of the assets in
USD
53,00,00,00
0.00
29,36,25,000.
00
20,67,59,443.3
4
1,03,03,84,4
43.34
Weighted returns 3.04%
Particulars US Loans
UK loans in
pounds
Turkish loans
in Lira Total
Beginning value
50,00,00,00
0.00
30,00,00,000.
00
20,00,00,000.0
0
1,00,00,00,0
00.00
Beginning exchange rate 1.00 1.60 0.55
Beginning value of assets in
foreign currency
50,00,00,00
0.00
18,75,00,000.
00
36,14,67,558.2
9
Interest rate 4% 5% 6%
Value of assets at the end of
the year
52,00,00,00
0.00
19,68,75,000.
00
38,31,55,611.7
8
Ending exchange rate 1.00 1.45 0.52
Ending value of the assets in
USD
52,00,00,00
0.00
28,54,68,750.
00
19,92,40,918.1
3
1,00,47,09,6
68.13
Return on portfolio 4.000% -4.844% -0.380% 0.47%

5
BANKING
Net return on portfolio 2.57%
Answer to Question 6:
Particulars US Loans
UK loans in
pounds
Turkish loans
in Lira Total
Beginning value
50,00,00,00
0.00
30,00,00,000.
00
20,00,00,000.0
0
1,00,00,00,0
00.00
Beginning exchange rate 1.00 1.60 0.55
Beginning value of assets in
foreign currency
50,00,00,00
0.00
18,75,00,000.
00
36,14,67,558.2
9
Interest rate 6% 8% 10%
Value of assets at the end of
the year
53,00,00,00
0.00
20,25,00,000.
00
39,76,14,314.1
2
Ending exchange rate 1.00 1.70 0.58
Ending value of the assets in
USD
53,00,00,00
0.00
34,42,50,000.
00
23,06,16,302.1
9
1,10,48,66,3
02.19
Weighted returns 10.49%
Particulars US Loans
UK loans in
pounds
Turkish loans
in Lira Total
Beginning value
50,00,00,00
0.00
30,00,00,000.
00
20,00,00,000.0
0
1,00,00,00,0
00.00
Beginning exchange rate 1.00 1.60 0.55
Beginning value of assets in
foreign currency
50,00,00,00
0.00
18,75,00,000.
00
36,14,67,558.2
9
Interest rate 4% 5% 6%
Value of assets at the end of
the year
52,00,00,00
0.00
19,68,75,000.
00
38,31,55,611.7
8
Ending exchange rate 1.00 1.70 0.58
Ending value of the assets in
USD
52,00,00,00
0.00
33,46,87,500.
00
22,22,30,254.8
3
1,07,69,17,7
54.83

6
BANKING
Return on portfolio 4.000% 11.563% 11.115% 7.69%
Net return on portfolio 2.79%

7
BANKING
Bibliography:
Koo, R. C. (2015). Escape from Balance Sheet Recession and the QE Trap. Singapore: Wiley.
Lewis, B. (2014). Twelve years of fiscal decentralization: a balance sheet. Regional dynamics in
a decentralized Indonesia, 135-155.
Souza, S. R., Tabak, B. M., Silva, T. C., & Guerra, S. M. (2015). Insolvency and contagion in the
Brazilian interbank market. Physica A: Statistical Mechanics and its Applications, 431,
140-151.
Yang, S., Yang, R., & Lin, Z. J. (2014). Historical evolution of the balance sheet in the People's
Republic of China. Accounting Historians Journal, 41(1), 1-34.