Question
A International Bank just hired you as the international financial management. You are given to following BC (Borrowing Capacity in two different currency; 700 million
A International Bank just hired you as the international financial management. You are given to following BC (Borrowing Capacity in two different currency; 700 million in USD and 500 million in Euro. the current spot of Euro is 1.20 (EUR/USD) and you are expecting a down swing of EUR against USD, i.e. EUR to be 1.18 in next 10 days. Your borrowing rate for USD is 2% and lending rate for USD is 1.25%. Your Borrowing rate for EUR is 1.5% and lending rate for Euro is .5%. Conduct the currency speculation and show me the speculative profit if your expectation is right. Answer in two decimals. Your answer must be in USD. and you are not allowed to use company deposit for this.
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