Display the position explicitly, Financial Management

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Q. Display the position explicitly

Example: I borrow 7800000 HKD at time t = t₀ at an interest rate r_t0.

After one year I pay back 7800000(1 + rt_o ).

At t₀ I exchange these HKD into USD1000000. These I deposit at the risk free rate R_to .

I anticipate that The HKD to depreciate 30% during the same time period.

My expected profit is

where the e_to is the pegged exchange rate 7.8.

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