What will its dollar profit be from speculation

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Reference no: EM131972483

Baylor Bank believes the New Zealand dollar will appreciate over the next five days from $.78 to $.80. The following annual interest rates apply:

Currency Lending Rate Borrowing Rate

Dollars 7.10% 7.50%

New Zealand dollar (NZ$) 6.80% 7.25%

Baylor Bank has the capacity to borrow $5 million. If Baylor Bank’s forecast is correct, what will its dollar profit be from speculation over the five-day period?

Reference no: EM131972483

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