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What is the expected spread measured in dollars

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Question - Assume that annual interest rates are 1.4 percent in the United States and 0.9 percent in Japan. A Bank can borrow (by issuing CDs) or lend (by purchasing CDs) at these rates. The spot rate is US$0.007/¥ and the forward rate is US$0.0075/¥. If the bank borrows a sum of US$2million, what is the expected spread measured in dollars?

Reference no: EM132755423

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