What will its dollar profit be from speculation

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Reference no: EM132037945

Baylor Bank believes the Canadian dollar will depreciate over the next 3 days from $1.34 to $1.14. The following annual interest rates apply: Currency Lending Rate Borrowing Rate Canadian Dollars (C$) .0520 .0580 Dollars 0.063 .0595 Baylor Bank has the capacity to borrow either Canadian $100,800,000 or US $75,000,000.

If Baylor Bank’s forecast is correct, what will its dollar profit be from speculation over the 3 day period (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)?

Reference no: EM132037945

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