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5. Use the following lending and borrowing rates for the institutional speculation situations that follow to calculate the potential gain or loss from each situation:

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5. Use the following lending and borrowing rates for the institutional speculation situations that follow to calculate the potential gain or loss from each situation: Currency Lending Rate Borrowing Rate U.S. Dollars 4.7% 5.2% Chinese Yuan 4.9% 5.4% Eurodollar 4.4% 4.9% Situations: Jones Brothers believe the Yuan will appreciate against the dollar due to U.S. pressure for China to increase the value of their currency. The Yuan is currently valued at 7.11 Yuan per $, but the company believes it will appreciate 10% against the dollar in the next six months. The company can borrow $50 million from a U.S. bank and invest it in a bank in China after converting to Yuan. Detail the steps in the process and indicate whether Jones would profit from the speculation. (show work)

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