Solution-Dollar profit be from speculation

Dollar profit be from speculation

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Reference no: EM131401731

Baylor Bank believes the New Zealand dollar will depreciated over the next 15 days from $.91 to $.89. The following annual interest rates apply:

Currency Lending Rate Borrowing Rate

Dollars 5.0% 6.8%

NZ$ 6.40% 7.00%

Baylor Bank has the capacity to borrow either NA$10 million or $5 million. If Baylor Bank's forecast is correct, what will it's dollar profit be from speculation over the 15 day period. (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)

Reference no: EM131401731

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Dollar profit be from speculation

Reference no: EM131401731

Reference no: EM131401731

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