The amount of canadian dollars jacque borrowed

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Reference no: EM131839766

Interest rates are 6.5% in the U.S. and 4% in Canada. Jacque carry trader borrows C$10,000,000 to execute a carry trade. At the start, the exchange rate is C$1.1325/$. After one year, the exchange rate is C$1.1175/$.

a) What is Jacque’s C$ profit or loss over the year?

b) When Jacque starts this trade, she is hoping that the U.S. dollar doesn’t ______________.

c) When Jacque starts this trade, she is hoping that the C$ doesn’t

d) If the C$ had not appreciated or depreciated over the year (stayed at C$1.1325/$) verify that Jacque would have made C$250,000. What’s special about C$250,000? You’ll see if you take the interest rate differential and multiply that percentage profit by the amount of Canadian dollars Jacque borrowed.

e) What is the BEEX in one year?

Reference no: EM131839766

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