15y (7 pts) Assume the following information regarding U.S. and European annualized Interbank interest rates: Currency Lending Rate Borrowing Rate U.S. Dollar ($) 3.1% 3.4% Euro () 2.2% 2.6% Milly Bank has the capacity to borrow either $4 million or 3 million in the interbank market. Today. the direct spot rate of the euro is $1.24/1 Euro. a) Scenario A: Milly Bank expects the direct spot rate of the euro to be $1.21/1 Euro in 90 days. What is Milly Bank's US dollar profit from speculating if the spot rate of the euro is indeed $1.21/1 Euro in 90 days and the bank does not use any of its own funds? boprow 3mE a 30lagose 6,2 C. 3744180 t 435,68 Costus 3653 595 sell el 3720,000 $8 Profit in $US - b) Scenario B: Milly Bank expects the direct spot rate of the euro to be $1.27 / 1 Euro in 90 days What is Milly Bank's US dollar profit from speculating if the spot rate of the euro is indeed $1.27 Euro in 90 days and the bank does not use any of its own funds? Paylock borrow um$ -(1+0.034632) = 4034 . 4/1.27 buy 3, 225, Bone (1toon ( 90 ) = 3,243,544 6 = 127 84 1193 4119 301 Profit in sus=_85 2014 - -40340ook c) Why is the profit different in part a and part b if the EURO depreciated by 2.4% in part and appreciated by 2.4% in part b