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4. Speculation Assume the following information regarding U.S. and European annualized interest rates: Currency Lending Rate Borrowing Rate U.S. Dollar ($) 6.73% 7.20% Euro ()
4. Speculation Assume the following information regarding U.S. and European annualized interest rates: Currency Lending Rate Borrowing Rate U.S. Dollar ($) 6.73% 7.20% Euro () 6.80% 7.28% Trensor Bank can borrow either $10 million or 10 million. The current spot rate of the euro is $1.16. Furthermore, Trensor Bank expects the spot rate of the euro to be $1.20 in 90 days. What is Trensor Bank's dollar profit from speculating if the spot rate of the euro is indeed $1.20 in 90 days? (2 point) 4. Speculation Assume the following information regarding U.S. and European annualized interest rates: Currency Lending Rate Borrowing Rate U.S. Dollar ($) 6.73% 7.20% Euro () 6.80% 7.28% Trensor Bank can borrow either $10 million or 10 million. The current spot rate of the euro is $1.16. Furthermore, Trensor Bank expects the spot rate of the euro to be $1.20 in 90 days. What is Trensor Bank's dollar profit from speculating if the spot rate of the euro is indeed $1.20 in 90 days? (2 point)
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